Because income is a payment for output, it is assumed that total income should eventually be equal to total output.[4]. A. money reserved for saving B. income, The transition to a global economy has increased "what" within the U>S>? Taking all this into account, we see that, A third way to calculate national output is to focus on income. (Income). For example, Japan may trade its electronics with Germany for German-made cars. Total output is $210. Answer (1 of 1): Because the output is directly related to money circulated (spent), which, in essence, is also the revenue. The value of the barber's output is 20*$10 =$200. an economy based on advanced technology, Which type of economic system has the highest level of government control? [5]. In both these methods, one has to be wary of the fact that consumption includes all spending by households, but business investment does not include all spending by firms, because if it did this would result in massive double counting because many of the things firms buy are processed and resold to consumers. Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country", whether consumed or used for further production. a- income inequality b- educational opportunity c- income equity d- buying power My answer is a. a. Please explain to me. Economic output is one of the most important economic measures for a country. Think of a simple example, then expand. When a particular quantity of output is produced, an identical quantity of income is generated because the output belongs to someone. Likewise, income can be sub-divided according to the uses to which it is put – consumption spending, taxes T paid, and the portion of income neither taxed nor spent (saving S). [clarification needed]. $800 C. Which of the following is a feature of a good budget? So, again the value of total output= total income. Consider a barber who gives 20 hair cuts a day and charges $10 each. Learn how and when to remove this template message, List of countries by GDP sector composition, Macro-development economics: an analytical approach, A Concise Guide To Macroeconomics What Managers, Executives, and Students Need to Know, https://en.wikipedia.org/w/index.php?title=Output_(economics)&oldid=959758015, Articles needing additional references from September 2013, All articles needing additional references, Wikipedia articles needing clarification from March 2019, Creative Commons Attribution-ShareAlike License, This page was last edited on 30 May 2020, at 13:11. Since output identically equals income, the above leads to the following identity: where the triple-bar sign denotes an identity. Just as increases in usage or effectiveness of factors of production can cause output to go up, anything that causes labour, capital or their effectiveness to go down will cause a decline in output or at least a decline in its rate of growth. She then sold the dress for 800 rupees (her costs of finishing the dress were 150 rupees). Exchange of output between two countries is a very common occurrence, as there is always trade taking place between different nations of the world. You can view more similar questions or ask a new question. As a result, investment only includes expenditures on output that is not expected to be used up in the short run. So value addition is equal to the sales price of a good or service, minus all the non-labour costs used to produce it. Note that investment now increases with output. To avoid the issue of over-counting, one can also focus entirely on final sales, where, though not directly but implicitly, all prior stage of output creation are accounted for. I hope this helps. Your school SUBJECT is not the name of your school. Chapter 5 will discuss the, The gross income of Ginger Hughes is $215 per week. a- income inequality b- educational opportunity c- income equity d- buying power My answer is a. The consumption function of Behr is given by: C=500+.8Y, where Y is income. The value of the barber's output is 20*$10 =$200. Select H for High-income nations.. If the value of the trades being made by both the countries is equal at that point of time, then their trade accounts would be balanced: the exports would be exactly equal to imports in both the countries. Which type of economic system has the highest level of government control? One way of tackling the problem of over counting is to, consider only value addition, i.e., the new output created at each stage of production. Explain why an economy's output, in esence, is also its income. The missing $10 is a part of the output/income of the seller of the cloth. To correct this issue, imports are eliminated from GDP. Think of a simple example, then expand. Now consider a dress maker, who buys $10 worth of cloth to make a dress which sells for $210. The concept of national output is essential in the field of macroeconomics. Consider the simple economy of Behr, whose government does not tax its citizens. A. money reserved for saving B. income that is less than its expenses C. high use of credit D. economic incentives Which type of economic system has the highest level of Economics Consider an economy with a constant nominal money supply, a constant level of real output Y … $800 C. Which of the following is a feature of a good budget? It is also the income of the producers and sellers Select M for Middle-income nations. Select L for Low-income nations. Select H for High-income nations. You can view more similar questions or ask a new question. Logically, the total output should be equal to the value of all goods and services produced in a country, but in counting every good and service, one actually ends up counting the same output again and again, at multiple stages of production. Consider the simple economy of Behr, whose government does not tax its citizens. Its really the VALUE of an economy's output is also its income. Even though both methods are widely acknowledged to be accurate, the second method is known as the expenditure method and is used more widely, and is the standard method of calculation of GDP in most countries. Economics (/ ɛ k ə ˈ n ɒ m ɪ k s , iː k ə -/) is the social science that studies how people interact with things of value; in particular, the production , distribution , and consumption of goods and services . Select L for Low-income nations. Which type of economic system has the highest level of government control? China, b. Japan ,c. Mongolia, d. North Korea 1.command economy 2. market-based economy, 3. command economy with limited market reforms i, What level of economic development is described by each of the following statements? In this lesson, you'll learn what economic output is as well as some related concepts. But that is also his daily income. If a foreign individual or firm bought a product from some other country, e.g., if an American firm bought a Cambodian manufactured good, then this expenditure cannot be counted in the consumer expenditures in American GDP since the output being purchased is foreign. Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country",[1] whether consumed or used for further production. In this method, we look at income which is paid to factors of production and labour for their services in producing the output. The national income accounts are related to an economy’s final product. Select H for High-income nations.. The logic behind using the expenditure method is that if all the expenditures on final goods are added up, the sum should equal the total production because every produced good is eventually produced in some form or the other. Select L for Low-income nations.. You pay 4 percent of your income in state income tax and 15.3 percent of your labor earnings in federal payroll taxes (employer and employee shares combined). Everything that is produced and sold is total output. Chapter 5 will discuss the. 6-2 Explain why an economy’s output, in essence, is also its income? the autonomous consumer spending in this economy is: A. This identity is distinct from the goods market equilibrium condition, which is satisfied when unplanned inventory investment equals zero: GDP (gross domestic product) is the most popular measure of national output. A. traditional economy B. market economy C. command economy D. Which of the following is a feature of a good budget? $1000 B. An economy's income must be equal to it's expenditure because every transaction has a buyer and a seller. Suppose that the income elasticity of demand is 0.5 and the interest elasticity of, Suppose you are a typical person in the U.S. economy. Thus we have the identity that output equals income (where an identity is an equation that is always true regardless of the values of any variables). An economy's income must be equal to it's expenditure because every transaction has a buyer and a seller. And though no consensus has developed, there are some factors which economists agree make output go up and down.
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