the basis of which classical economists thought that general over-production and general unemployment are not possible. Basic Assumptions of Say’s Law: * (a) Perfectly competitive market and free exchange economy. * (b) Free flow of money incomes. All the savings must be immediately invested and all the income must be immediately spent. * (c) Savings are equal to investment
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Income Effect The equilibrium of the consumer is obtained on the basis of the assumption that the income level of the consumer remains constant and prices of the two commodities also remain constant. When income of the consumer changes or when any price level changes the equilibrium position will be affected. When income increases‚ prices of the commodities remaining the same‚ the budget line shifts parallel to the right. This happens because there is a change in the intercept part of the equation
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National Income is defined as the sum total of all the goods and services produced in a country‚ in a particular period of time. Normally this period consists of one year duration‚ as a year is neither too short nor long a period. National product is usually used synonymous with National income. Concepts of National Income There are different concepts of National Income‚ namely; GNP‚ GDP‚ NNP‚ Personal Income and Disposable Income. Gross National Product (GNP) GNP at market price is sum total of
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National Income Statistics and Standard of Living The national income statistics show that the USA has the highest standard of living; this can be proved by looking at the gross national income of The United States‚ which is $12‚969.6 million‚ and the gross national income per capita which is $43‚740. This figure is over 125 times the income per capita of Tanzania which is $340. This also suggests that the standard of living in Tanzania is very poor. The UK calculated a gross national income
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National Income National income is a sum of incomes received in a year by a nation’s factors of production for their contributions to economic activity; or a sum of wages and salaries‚ interest‚ rent‚ and profit received during a year by a nation’s factor of production. It excludes gifts‚ consumer debt‚ grants and benefits received without engaging in any productive or economic activity. National income accounting refers to the set of rules and techniques of measuring the income of the economy
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or a trade surplus. Thus‚ this work is done to examine and find out how the growth of National Income can be affected by trade balance. STATEMENT OF PROBLEM Every country wants to be just an exporter of goods and services. But since no man is an island‚ no matter how much exports a country makes‚ it still has to import at some point. Using the national income identity‚ Y = C + I + G + (X – M) Y = National income or GDP C = Consumption I = gross investment G = Government expenditure X = Exports and
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National income accounting provides economists and statisticians with detailed information that can be used to track the health of an economy and to forecast future growth and development. The measure of national income allows us to compare output and the standard of living of one country with another‚ an increase in the National Income statistics usually an increase in standard of living. The measure of national income that we use to do this is known as Gross Domestic Product (GDP). GDP per capita
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(c) Assume that total household incomes rise from £500bn to £550bn. Assume that this results in the consumption of domestically produced goods and services rising from £450bn to £490bn. What is the mpcd? (Cd / (Y = £40bn/£50bn = 4/5 or 0.8 (d) Assuming that the mpcd remains constant‚ what will the level of consumption of domestically produced goods and services be if national income now rises to £700bn? If national income rises from £550bn to £700bn‚ a rise
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Homework On National Income Answer Sketch for Selected Questions Dr. Patrick Toche April 2‚ 2011 1 Reference : Mankiw‚ Mankiw‚ Macro (7th)‚ Chapter 2‚ Problem 4. Suppose a woman marries her butler. After they are married‚ her husband continues to wait on her as before‚ and she continues to support him as before (but as a husband rather than as an employee). How does the marriage affect GDP ? What is your reaction to this ? Hints : GDP is a measure of recorded transactions only‚ not
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are in search of jobs and unable to obtain a source of income. According to NBC news “7.8% of Americans are unemployed as of Sept 2012”. If drilling in ANWR occurred the national resource committee says‚ “Would create tens of thousands of American jobs and contribute to significant economic growth”. This investment as Americas would be nothing but beneficial towards each other. It would be satisfying the unemployed who will then have an income; the newly employed will have money to spend and give
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