1. Measuring national output and income Chapter 08

2. What is national income? -Also referred to as not national product may be defined as a “ measure of the money value of the total flow of the goods and services produced in an economy over a specified period of time. National income consist of the following 1. wage or salary – those generated by labor 2. interest – those generated by lender of funds 3.rent – those generated by owners of real estate 4.profit – those generated by the entrepreneurs 5. net factor- income abroad

3. Important Terms used in measuring national income 1. Gross Domestic Product- is a measure of the total flow of good and services produced by the economy over a particular time period. 2.Gross national product – is a measure of the market value of the goods and services produced by nationals or citizen of a country in a particular time period 3.market value -refer to the current prices of goods and services produced in the economy. 4.Value added- refer to the difference between the vale of goods produced and the cost of material and supplies used in producing them 5.consumption – Refer to the “expenditure by consumer of the final good and services

4. 6.Investment- is an activity that uses resources now in such a way that they allow for greater production in the future , and hence , greater consumption in the future. Investment are two types : 1. fixed investment- a good that is purchased to b e used in order to make other goods and services. 2.Inventory investment – are those used to increase the amount of inventories of finished product. 7. Consumer Durables – are consumer good usually last for several years.