Professional Documents
Culture Documents
Twelfth Edition
Chapter 6
Measuring National
Output and National
Income
THINKING PRACTICALLY
1. John has a 2009 Honda Civic. In 2013, he sells it to Mary for $10,000. Is that $10,000
counted in the GDP for 2013?
2. If John is an automobile dealer, does that change your answer to Question 1 at all?
Dollars ($,
Billions)
National income 15,070.4
Less: Amount of national income not going to households -341.8
Equals: Personal income 14,728.6
Less: Personal income taxes -1,742.9
Equals: Disposable personal income 12,985.8
Less: Personal consumption expenditures -11,930.3
Personal interest payments -256.3
Transfer payments made by households -170.3
Equals: Personal saving 628.3
Personal saving as a percentage of disposable personal income: 4.8%
THINKING PRACTICALLY
1. The article above emphasizes the importance of being able to measure an economy’s
output to improve government policy. Looking at recent news, can you identify one
economic policy debate or action that referenced GDP?
THINKING PRACTICALLY
1. Why do you think we have not counted pollution in GDP measures in the past?
Source: Data from GNI per capita, PPP (current international $), The World Bank Group,
Retrieved from http://data.worldbank.org/indicator/NY.GNP.PCAP.PP.CD/countries/1W?
display=default
Copyright © 2017 Pearson Education, Inc. 6-37
REVIEW TERMS AND CONCEPTS (1 of 2)
• base year • gross domestic product (GDP)
• change in business inventories • gross investment
• compensation of employees • gross national income (GNI)
• corporate profits • gross national product (GNP)
• current dollars • gross private domestic
• depreciation investment (I)
• disposable personal income, or • income approach
after-tax income • indirect taxes minus subsidies
• durable goods • informal economy
• expenditure approach • intermediate goods
• final goods and services • national income
• fixed-weight procedure • national income and product accounts
• government consumption and gross • net business transfer payments
investment (G)