by mr. lau san-fat/ver 2004 ch1-national income accounting-sv 1 ch1-national income accounting hk...

By Mr. LAU san-fat/ver 200By Mr. LAU san-fat/ver 20044

CH1-National Income Accounting-SVCH1-National Income Accounting-SV 11

CH1-National Income CH1-National Income AccountingAccounting

HK Certificate of Education HK Certificate of Education ExaminationExamination



National Economic ObjectivesNational Economic Objectives

Attaining full employmentAttaining full employment

Attaining economic growthAttaining economic growth

Stabilizing the general price levelStabilizing the general price level



National Income AccountingNational Income Accounting

By measuring national income of the By measuring national income of the economic territory of an economy, one can economic territory of an economy, one can estimate how well his economy performs estimate how well his economy performs in achieving its national economic in achieving its national economic objectives.objectives.



Stock ConceptStock Concept

A stock is any measurement at a particular A stock is any measurement at a particular point of time.point of time.

ExampleExample:: O On 14n 14thth August 2004, Peter’s tot August 2004, Peter’s total wealth was $200,000.al wealth was $200,000.



Flow ConceptFlow Concept

A flow is any measurement that spreads oA flow is any measurement that spreads over a certain period of time. ver a certain period of time.

Example:Example: Peter earns $8,000 as his monthPeter earns $8,000 as his monthly incomely income..



Stock or Flow?Stock or Flow?Peter earns an interest of $10 from his $100,Peter earns an interest of $10 from his $100,000 saving in HK Bank for a month000 saving in HK Bank for a month..

FlowFlow

On 31On 31stst August 2004, Welcome’s total stock August 2004, Welcome’s total stock of goods in Long Ping Estate was $1 of goods in Long Ping Estate was $1 million.million.

StockStock

A secondary school teacher earns $16,000 A secondary school teacher earns $16,000 per month.per month. FlowFlow

HK’s GDP for the year of 2003 was $20,000 HK’s GDP for the year of 2003 was $20,000 billions.billions. FlowFlow



Intermediate Vs. Final GoodsIntermediate Vs. Final Goods

Intermediate goods are goods and Intermediate goods are goods and services produced for assisting further or services produced for assisting further or other production.other production.

Final goods are goods for final use or Final goods are goods for final use or consumption.consumption.

A good can be an intermediate good or a A good can be an intermediate good or a final good, depending on final good, depending on howhow it is being it is being used.used.



Intermediate or Final Goods?Intermediate or Final Goods?

Flour bought by Golden Apple Cake Flour bought by Golden Apple Cake shop.shop. IntermediateIntermediate

Lobster cooked by mom for Lobster cooked by mom for celebrating your pass in Econ test.celebrating your pass in Econ test. FinalFinal

Fish steamed by the cook of a fish Fish steamed by the cook of a fish stall for his workers.stall for his workers. FinalFinal

An ice-cream you bought from An ice-cream you bought from McDonald’s.McDonald’s. FinalFinal



Basic Circular Flow ModelBasic Circular Flow Model

HouseholdsFirms

Factor Income

Expenditure

Factors of production

Goods & services

Real Flow Money Flow



We consider the basic circular flow of a certain economy.We consider the basic circular flow of a certain economy.

Goods & ServicesGoods & Services

Factors of ProductionFactors of Production

Real Flow

$20 $300 $200

Total market value of all final goods= $20 + $300 + $200= $520

Total market value of all final goods= $20 + $300 + $200= $520Firms HouseholdsHouseholds



We consider the basic circular flow of a We consider the basic circular flow of a certain economy.certain economy.We consider the basic circular flow of a We consider the basic circular flow of a certain economy.certain economy.



Real Flow

$20 $300 $200

Total market value of all final goods= $20 + $300 + $200= $520

Total market value of all final goods= $20 + $300 + $200= $520FirmsFirms HouseholdsHouseholds

National Product orNational Output





Real Flow

$20 $300 $200

Money Flow

On the other hand, we consider the On the other hand, we consider the households total expenditure on these households total expenditure on these goods.goods.


FirmsFirms

$100$20 $100$100$100 $100

HouseholdsHouseholds





Real Flow

$20 $300 $200

Money Flow



FirmsFirmsTotal Expenditure on these goods= $20 + $300 + $200= $520

Total Expenditure on these goods= $20 + $300 + $200= $520

$100$20 $100$100$100 $100

HouseholdsHouseholds

Expenditure on FinalExpenditure on FinalGoods & ServicesGoods & Services





Real Flow

$20 $300 $200

Money Flow



$100$20 $100$100$100 $100

HouseholdsHouseholdsFirmsFirms




National Expenditure




Those households who provide factors Those households who provide factors services in the production would receive services in the production would receive income from the firms.income from the firms.


Money Flow

Households’ total income= $200 + $50 + $150 + $120= $520


Factor IncomeFactor Income

Wages InterestRentalIncome Profit

$200 $50 $150 $120

FirmsFirms HouseholdsHouseholds






Money Flow





$200 $50 $150 $120


National Income




Real Flow



$200 $50 $150 $120

Money FlowGoods & ServicesGoods & Services


$20 $300 $200

$100$20 $100$100$100 $100




$20


Real Flow



$200 $50 $150 $120



$20 $300 $200

$100$100$100$100 $100


The total market values

of final goods & services

The total market values

of final goods & services

The total expenditures onthe final goods & servicesThe total expenditures onthe final goods & services

The total income of the householdsThe total income of the households

From the above analysis, we find From the above analysis, we find that:that:From the above analysis, we find From the above analysis, we find that:that:



$20


Real Flow



$200 $50 $150 $120



$20 $300 $200

$100$100$100$100 $100


National ProductNational Product

National ExpenditureNational Expenditure

National IncomeNational Income

Ex 1: TB/P.8/MCQ1

That is:That is:That is:That is:



National Output and …National Output and …

National Output (NO) is the measure of National Output (NO) is the measure of total market value of all final goods & total market value of all final goods & services.services.National Expenditure (NE) is the measure National Expenditure (NE) is the measure of total expenditure on final goods & of total expenditure on final goods & services.services.National Income (NI) is the measure of National Income (NI) is the measure of households’ total income.households’ total income.NO ≡ NE ≡ NINO ≡ NE ≡ NI



Gross Domestic Product (GDP)Gross Domestic Product (GDP)

Definition:Definition: GDP is GDP is an aggregatean aggregate measure measure ofof the the total total value of value of productionproduction of all of all resideresident producing unitsnt producing units within the economic within the economic territory of an economy territory of an economy in a in a specified periospecified periodd, usu. a quarter or , usu. a quarter or a a year.year.



Resident Producing UnitResident Producing Unit (RPU) (RPU)

A resident producing unit maintains her A resident producing unit maintains her centre of economic interests in the centre of economic interests in the economic territory of an economy.economic territory of an economy.

A RPU therefore A RPU therefore ordinarily operatesordinarily operates in the in the economic territory. economic territory.



Resident Producing Unit or Not?Resident Producing Unit or Not?

A factory producing toys in HKA factory producing toys in HK

Yes!




A fast food shop in HKA fast food shop in HK

Yes!




An Citibank Corporation in HKAn Citibank Corporation in HK

Yes!

An Citibank Corporation in USAAn Citibank Corporation in USA

No!




Yes!

It depends



Gross National Product (GNP)Gross National Product (GNP)

Definition:Definition: GNP is a measure of the total GNP is a measure of the total income earned by residents of an income earned by residents of an economy from engaging in various economy from engaging in various economic activities, irrespective of economic activities, irrespective of whether the economic activities are carried whether the economic activities are carried out within the economic territory or out within the economic territory or outsideoutside..

GNP is identical to Gross national income GNP is identical to Gross national income (GNI), which is a contemporary term.(GNI), which is a contemporary term.



Residents of an EconomyResidents of an Economy

Residents maintain their center of Residents maintain their center of economic interests in an economy.economic interests in an economy.Resident individualsResident individuals refer to those who refer to those who normally stay in the economic territory of normally stay in the economic territory of the economy for at least 12 months or the economy for at least 12 months or longer, or intend to do so, irrespective of longer, or intend to do so, irrespective of their nationality.their nationality.Resident organizationsResident organizations (or RPUs) refer to (or RPUs) refer to those which those which ordinarily operateordinarily operate in the in the economic territory.economic territory.



Residents or Not?Residents or Not?

A foreign domestic helper working in HKA foreign domestic helper working in HK YesYes

A branch of a foreign bank operating in A branch of a foreign bank operating in HKHK YesYes

A solicitor coming to HK to work on a A solicitor coming to HK to work on a short-term 3-month contract for a local short-term 3-month contract for a local companycompany

NoNo



GDP Versus GNPGDP Versus GNP

GDPGDP GNPGNP

Value of productionValue of production (Factor) income earned(Factor) income earned

By resident producing By resident producing unitunit

By residentsBy residents

Factors are owned by Factors are owned by residents or non-residents or non-residentsresidents

Factors are owned by Factors are owned by residents onlyresidents only

Within the economic territory

Within or outside the economic territory



GDP Versus GNPGDP Versus GNP

GDPGDP is more relevant for analysis related is more relevant for analysis related to production activities within the to production activities within the economy, e.g. employment, productivity, economy, e.g. employment, productivity, industrial output, investment in equipment industrial output, investment in equipment & structure.& structure.

GNPGNP is useful for analyzing economic is useful for analyzing economic situations relating to situations relating to income of residentsincome of residents, , investment behavior, domestic demand & investment behavior, domestic demand & inflation.inflation.



Being Included in GDP or GNP?Being Included in GDP or GNP?

Mr. Chan is now living in HK. He has a toy Mr. Chan is now living in HK. He has a toy factory here and earns $2 million this year.factory here and earns $2 million this year.

HK’s HK’s GDPGDP

Mr. Chan also has a garment factory in Mr. Chan also has a garment factory in China and earns $1.2 million this year.China and earns $1.2 million this year.

HK’s HK’s GNPGNP

A Filipino maid in HK usually gets a long-A Filipino maid in HK usually gets a long-term contract of two years. She earns term contract of two years. She earns $22,000 this year.$22,000 this year.


A retired old man who is a resident of HK A retired old man who is a resident of HK and earns a rental income of $50 000 this and earns a rental income of $50 000 this year from his house in Australia.year from his house in Australia.




From GDP to GNPFrom GDP to GNP

GNP = GDP + (Factor income earned byGNP = GDP + (Factor income earned by

residents from outside theresidents from outside the

economic territory – Factoreconomic territory – Factor

income earned by non-residentsincome earned by non-residents

from within the economy) from within the economy)

= GDP + Net factor income from= GDP + Net factor income from

abroad or External Factor Incomeabroad or External Factor Income

FlowsFlows



From GDP to GNPFrom GDP to GNP

Factor IncomeFactor Income= investment income + compensation of = investment income + compensation of

employeesemployees

Investment income Investment income = direct investment income(e.g. dividends) + = direct investment income(e.g. dividends) +

portfolio investment income(e.g. security portfolio investment income(e.g. security interest) + other investment income(e.g. interest) + other investment income(e.g. deposits interest)deposits interest)



From GNP to GDPFrom GNP to GDPGDP = GNP – (Factor income earned byGDP = GNP – (Factor income earned by

residents from outside theresidents from outside the economic territory – Factoreconomic territory – Factor income earned by non-residentsincome earned by non-residents from within the economy) from within the economy) = GNP – Net Factor Income from= GNP – Net Factor Income from Abroad or Net External FactorAbroad or Net External Factor Income FlowsIncome Flows Ex 2: TB/P.26/MCQ 6 & 7

Ex 3: TB/P.27/MCQ8



More About National Income More About National Income StatisticsStatistics

GDP at factor cost = GDP at market price GDP at factor cost = GDP at market price – indirect business taxes + subsidies– indirect business taxes + subsidies




GDP at factor cost = GDP at market price GDP at factor cost = GDP at market price – indirect business taxes + subsidies– indirect business taxes + subsidies

GDP at market price = GDP at factor cost GDP at market price = GDP at factor cost + indirect business taxes - subsidies + indirect business taxes - subsidies

GDP per capita = GDP/population sizeGDP per capita = GDP/population size

Net Domestic Product, NDP = GDP - Net Domestic Product, NDP = GDP - depreciationdepreciation




Net National Product, NNP = GNP - Net National Product, NNP = GNP - depreciationdepreciationNational Income, NI = W + I + R + National Income, NI = W + I + R +



Measuring GDP(1): The ProductMeasuring GDP(1): The Product or Outputor Output ApproachApproach

GDP is total market values of all final goods GDP is total market values of all final goods and services produced by the resident prodand services produced by the resident producing units of an economy within a specifieucing units of an economy within a specified period.d period.

Intermediate goods are excluded to avoid tIntermediate goods are excluded to avoid the problem of double counting.he problem of double counting.

In reality, it is hard to distinguish between fiIn reality, it is hard to distinguish between final and intermediate goods.nal and intermediate goods.– tthus, value-added method is adoptedhus, value-added method is adopted



By Value Added ApproachBy Value Added Approach

(From C.S.D.)(From C.S.D.)GDP is an aggregate GDP is an aggregate measure of the total value of net output of measure of the total value of net output of all resident producing units of a country or all resident producing units of a country or territory in a specified period.territory in a specified period.

Net output is measured by value addedNet output is measured by value added

Value added = value of gross output – Value added = value of gross output – value of intermediate consumptionvalue of intermediate consumption– Intermediate consumption is the value of Intermediate consumption is the value of

goods & services used up during production.goods & services used up during production.



By Value Added ApproachBy Value Added Approach

value added = sales revenue - input costvalue added = sales revenue - input cost

By value added approach, By value added approach, – GDP = summation of value added in ALL GDP = summation of value added in ALL

stages of production + indirect business taxes stages of production + indirect business taxes (IBT) – subsidies (S)(IBT) – subsidies (S)



Stage 1: Growing wheat Input cost (wheat seeds) = $0.0 Sales revenue (wheat) = $2.0

Value added = $(2.0 - 0.0)= $2.0



Stage 2: Milling wheat Input cost (wheat) = $2.0 Sales revenue (flour) = $3.5

Value added = $(3.5 - 2.0) = $1.5



Stage 3: Baking bread Input cost (flour) = $3.5 Sales revenue (bread)= $6.0

Value added = $(6.0 - 3.5) = $2.5



Measuring GDP:

Given: final good: bread ($6.0) Intermediate goods: wheat ($2.0) flour ($3.5)

• By Output Approach, GDP = $6.0

• By Value Added Method GDP = $[(2.0 - 0.0) + (3.5 - 2.0) + (6.0 - 3.5)] = $6.0



Items Being Excluded from GDPItems Being Excluded from GDP

ItemsItems ReasonsReasons

Non-marketed or self-Non-marketed or self-sustained productssustained products

No market value No market value involvedinvolved

Reference: TB/P.21/Closer LookReference: TB/P.21/Closer Look

Ex 4: TB/P.13/Q2.1Ex 5: TB/P.18/MCQ4



Measuring GDP(2): The Measuring GDP(2): The Expenditure ApproachExpenditure Approach

GDP = C + I + G + (X - M)GDP = C + I + G + (X - M)

while (C + I + G + X) = while (C + I + G + X) = total final demandtotal final demand




on ‘C’: only expenditure on consuming final on ‘C’: only expenditure on consuming final products countedproducts counted

on ‘I’: I = gross domestic fixed capital formation ‘I’: I = gross domestic fixed capital formation + change in stockson + change in stocks– gross domestic fixed capital formation = gross domestic fixed capital formation =

expenditure on land, buildings & construction, expenditure on land, buildings & construction, plant, machinery, equipment & related expensesplant, machinery, equipment & related expenses

– change in stocks = unsold goods (values of raw change in stocks = unsold goods (values of raw materials & work-in-progress)materials & work-in-progress)




net investment = gross investment – deprenet investment = gross investment – depreciationciation

Ex 6: Why should the changes in inventories be included in GDP?•TB/P.15/Closer Look




on ‘G’: including payments to civil servants on ‘G’: including payments to civil servants & expenditure on final products while exclu& expenditure on final products while excluding transfer paymentsding transfer payments

on ‘X-M’: net exportson ‘X-M’: net exports= = net exports of goods + net exports of servicesnet exports of goods + net exports of services

= [= [domestic exports of goods + re-exports of godomestic exports of goods + re-exports of goodsods – imports of goods] + [exports of services – imports of goods] + [exports of services – imports of services]– imports of services]



Why M is deducted from the Why M is deducted from the total final demand?total final demand?

The value of imports has to be removed The value of imports has to be removed because EACH of the components of C, because EACH of the components of C, G, I & X has import contents (both direct G, I & X has import contents (both direct and indirect import contents) but it is not and indirect import contents) but it is not possible to remove such. They are possible to remove such. They are therefore removed collectively by the therefore removed collectively by the subtraction of M.subtraction of M.

Hence, GDP = C + G + I + X Hence, GDP = C + G + I + X - M- M





Unreported transactionsUnreported transactions No data is availableNo data is available

Illegal transactionsIllegal transactions No data is availableNo data is available

Second-handed goodsSecond-handed goods No current production No current production involvedinvolved





Expenditure on stocks, Expenditure on stocks, i.e. shares & bondsi.e. shares & bonds

-no production involved-no production involved

-a mere transfer of -a mere transfer of ownershipownership

Expenditure on welfare Expenditure on welfare paymentspayments

No production involvedNo production involved

Ex 7: TB/P.11/MCQ2EX 8: TB/P.17/Q2.2



Measuring GDP(3): The Income Measuring GDP(3): The Income ApproachApproach

By income approach, GDP is calculated as By income approach, GDP is calculated as the sum of incomes for the factors of the sum of incomes for the factors of production distributed by the resident production distributed by the resident producing units in a country or territory, as producing units in a country or territory, as rewards to their production of goods and rewards to their production of goods and provision of services.provision of services.In other words, GDP is the sum of factors In other words, GDP is the sum of factors income (arising from production) provided income (arising from production) provided by the resident producing units in an by the resident producing units in an economic territory in a specified period.economic territory in a specified period.




Factor incomes = compensation of Factor incomes = compensation of employees (including wages, salaries & employees (including wages, salaries & other employee benefits) + gross other employee benefits) + gross operating surplus of enterprisesoperating surplus of enterprises




By income approach, GDPBy income approach, GDP

= compensation of employees + gross= compensation of employees + gross

operating surplus of enterprises +operating surplus of enterprises +

indirect business taxes – subsidiesindirect business taxes – subsidies

= W + I + R + = W + I + R + + depreciation allowance + depreciation allowance

+ indirect business taxes – subsidies+ indirect business taxes – subsidies





Income from gifts, Income from gifts, gambling & lucky drawgambling & lucky draw

No production involvedNo production involved



Comparison of the 3 ApproachesComparison of the 3 Approaches

Expenditure Approach

X

I

G

C

= Imported contents removed at the aggregate level, i.e. deducting M from (C + I + G + X)



Comparison of the 3 ApproachesComparison of the 3 Approaches

Expenditure Approach

X

I

G

C

Income Approach

IBT - S

Compensationof

employees

gross operating

surplus

ProductApproachValue added:

manufacturing sector

Value added:services

sector

Value added:other sectors

IBT - S

GDPat

factorcost

GDPat

marketprice



GDP at Current Market PricesGDP at Current Market Prices

GDP at current market prices/Money GDP at current market prices/Money GDP/Nominal GDP measures the market GDP/Nominal GDP measures the market value of final goods and services at value of final goods and services at current market prices.current market prices.

Nominal GDP = P x QNominal GDP = P x Q



GDP at Constant Market PricesGDP at Constant Market Prices

GDP at constant market prices/Real GDP GDP at constant market prices/Real GDP measures the market value of final goods measures the market value of final goods and services at the prices of a particular and services at the prices of a particular chosen year called base year(with chosen year called base year(with constant general price, i.e. P =1).constant general price, i.e. P =1).

Real GDP = P x Q = 1 x Q = Q = real Real GDP = P x Q = 1 x Q = Q = real output (in current year)output (in current year)

Therefore, Therefore, Real GDP = Real GDP = Real output Real output = = Real living standard Real living standard



Nominal GDP Vs. Real GDPNominal GDP Vs. Real GDP

As nominal GDP = P x QAs nominal GDP = P x Q nominal GDP = nominal GDP = P x Q or P x Q or

= P x = P x Q orQ or

= = P x P x Q Q

Thus, Thus, nominal GDP nominal GDP real output real output

Thus, Thus, nominal GDP nominal GDP real living real living standardstandard



Find Real GDP: by Implicit GDP Find Real GDP: by Implicit GDP DeflatorDeflator

As (price index of the base year/price index As (price index of the base year/price index of the current year) = (real GDP/money of the current year) = (real GDP/money GDP) and price index of the base year = GDP) and price index of the base year = 100100– implicit GDP deflator = (money GDP/real implicit GDP deflator = (money GDP/real

GDP)x100GDP)x100– thus, implicit GDP deflator = price index of the thus, implicit GDP deflator = price index of the

current yearcurrent year– thus, real GDP = money GDP x (100/price index thus, real GDP = money GDP x (100/price index

of the current year)of the current year)



Money GDP, Prices & Real Money GDP, Prices & Real GDPGDP

If %If %↑↑money GDP > %money GDP > %↑↑PP ↑↑real GDPreal GDP

If %If %↑↑money GDP < %money GDP < %↑↑PP ↓↓real GDPreal GDP

If %If %↑↑money GDP = %money GDP = %↑↑PP real GDPreal GDP

If %If %↑↑money GDP & %↓Pmoney GDP & %↓P ↑↑real GDPreal GDP

P




If %If %↓↓money GDP & %money GDP & %↑↑PP ↓↓real GDPreal GDP

If %↓money GDP > %↓PIf %↓money GDP > %↓P ↓↓real GDPreal GDP

If %↓money GDP < %↓PIf %↓money GDP < %↓P ↑↑real GDPreal GDP

If %↓money GDP = %↓PIf %↓money GDP = %↓P real GDPreal GDP

P




If %If %↑↑money GDP > %money GDP > %↑↑real GDPreal GDP ↑↑PP

If %↑money GDP < %↑real GDPIf %↑money GDP < %↑real GDP ↓↓PP

If %↑money GDP = %↑real GDPIf %↑money GDP = %↑real GDP PP

If %↑money GDP & %↓real GDPIf %↑money GDP & %↓real GDP ↑↑PP

P




If %If %↓↓money GDP & %money GDP & %↑↑real GDPreal GDP ↑↑PP

If %↓money GDP > %↓real GDPIf %↓money GDP > %↓real GDP ↓↓PP

If %↓money GDP < %↓real GDPIf %↓money GDP < %↓real GDP ↑↑PP

If %↓money GDP & =%↓real GDPIf %↓money GDP & =%↓real GDP PP

P

Ex 9: TB/P.28/MCQ9 Ex 10: TB/P.30/MCQ10



The Growth Rate of GDPThe Growth Rate of GDP

GDP growth rate = [(GDP of current period GDP growth rate = [(GDP of current period – GDP of last period)/GDP of last period] x – GDP of last period)/GDP of last period] x 100%100%

Real GDP growth rate = [(real GDP of Real GDP growth rate = [(real GDP of current period – real GDP of last current period – real GDP of last period)/real GDP of last period] x 100%period)/real GDP of last period] x 100%

Ex 11: TB/P.31/MCQ11Ex 12: TB/P.32/MCQ12



Uses of National Income StatisticsUses of National Income Statistics

as a measurement of living standardas a measurement of living standard

as a basis for international comparison of as a basis for international comparison of welfare or living standardwelfare or living standard

as a basis for formulating government as a basis for formulating government policiespolicies

as a basis for formulating business as a basis for formulating business decisionsdecisions

as an indicator of economic progressas an indicator of economic progressEx 13: TB/P.37/MCQ13



Limitations of National Income Limitations of National Income StatisticsStatistics

nominal GDP neglects the effects of price nominal GDP neglects the effects of price changechange– real GDP is preferredreal GDP is preferred




real GDP neglects the effects of real GDP neglects the effects of population sizepopulation size– real GDP per capita is preferredreal GDP per capita is preferred




real GDP per capita ignores the problem real GDP per capita ignores the problem of income distributionof income distribution– uneven distribution of income implies the uneven distribution of income implies the

problem of widening income gapproblem of widening income gap




real GDP per capita ignores the effects real GDP per capita ignores the effects of self-sustained products, non-marketed of self-sustained products, non-marketed goods & unreported transactionsgoods & unreported transactions– real GDP per capita underestimates the real real GDP per capita underestimates the real

standard of livingstandard of living




real GDP per capita ignores the real GDP per capita ignores the desirable and undesirable effects of desirable and undesirable effects of productionproduction

real GDP per capita neglects the effects real GDP per capita neglects the effects of composition of GDPof composition of GDP– larger portion of consumer goods supports a larger portion of consumer goods supports a

higher present living standard while larger higher present living standard while larger portion of capital goods implies a higher portion of capital goods implies a higher future living standardfuture living standard

Ex 14: TB/P.38/MCQ14



Factors Affecting National IncomeFactors Affecting National Income

Demand-sideDemand-side Factors: Factors:– consumption (C) demandconsumption (C) demand– investment (I) demandinvestment (I) demand– government expenditure (G) demandgovernment expenditure (G) demand– net exports (X-M) demandnet exports (X-M) demand



Factors Affecting National IncomeFactors Affecting National Income

SSupply-sideupply-side Factors: Factors:– labor productivitylabor productivity– amount of capital (goods)amount of capital (goods)– amount of landamount of land– level of entrepreneurshiplevel of entrepreneurship– level of technologylevel of technology

Ex 15: TB/P.39/MCQ15

Revision Ex: TB/P.43

by mr. lau san-fat/ver 2004 ch1-national income accounting-sv 1 ch1-national income accounting hk...

Documents

final goodsintermediate

households total expenditure

total market value

final use

peters total wealth

certain economy

economic territory

factors services