What adjustments need to be made to go from national income to GDP?
What will be an ideal response?
National income shows the amount of income paid as compensation of employees, rents, interest, proprietors’ income, corporate profits, and taxes on production and income. This amount will be less than GDP, which shows the total expenditures on all final goods and services. To get to GDP, three adjustments must be made to national income. First, there is an allocation for the consumption of fixed capital (depreciation) that must be added. Second, a statistical discrepancy is added. Third, net foreign factor income is subtracted. This net foreign factor income is the difference between what foreign-owned resources earned in the United States minus what U.S-owned resources earn abroad. GDP represents “domestic” production, regardless of whether the domestic production with the United States was foreign or U.S.-owned. So, national income plus consumption of fixed capital, plus a statistical discrepancy, and minus net foreign factor income equals GDP.
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When economists use the term "correlation," they are referring to
A) normative economics. B) positive economics. C) cause and effect relationships between variables. D) economic policy. E) how two variables move together in a predictable way.
The marginal cost is the:
a. b and c. b. change in total cost as the quantity changes by one unit. c. change in total variable cost as the quantity changes by one unit. d. change in total fixed cost as the quantity changes by one unit. e. same as the fixed cost when average fixed cost is at a minimum.