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Because GDP, which stands for Gross Domestic Product, is the dollar value of total US production (of goods and services) within a given quarter. To measure how much we've produced, we keep track of how much has been bought in the economy. Another way to say this is that we keep track of how much each sector spends.
Remember that GDP = C + I + G + NX, where C is consumption by households, I in investment (business spending), G is government is spending, and NX is net exports (exports minus imports). So this is how GDP is equal to total expenditure, expenditure being another word for spending.
GDP is also equal to total income because every dollar that is spent is spent to pay someone. For example, if you buy an apple at a grocery store for a dollar, some of that dollar will go to the government, some to the employees of the store, some to the business owner as profit.
Every time money changes hands (in a transaction) it is the income of someone (the one who received it) and the expenditure of someone else (the one who gave it). Some possible transactions are:
You get paid: you receive income equal to the expenditure of your employer;
You buy something: your expenditure is equal to the income of the shop selling you the item;
GDP just totals up the amount of all these transactions and so is equal to the total income or total expenditure (as both are equal) in an economy..
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75 of 60?
75 percent of 60 is equal to 45. 75% is also equal to 3/4s of the total amount.
What is the meaning of shutdown point?
The shutdown point is the output level at which total revenue is equal to the total variable cost. Here the product price is also equal to its average variable cost.
Benefits of calculating budget variance?
Budgeted variance analysis is very helpful in controlling the cost and expenditure of products and also helpful in determining the variation in the production expenditure with budgeted expenditure and help to eliminate variances in future and make better budgets.
What is ROE divided by ROA?
ROE divided by ROA isi the equity multiplier, which is also equal to total assets divided by total equity.
is it true or false if the liabilities owed by a business total $300,000 and stockholders equity is equal to $300,000, then the assets also total $300,000?
False
Why must an economy's income be equal to it's expenditure?
An economy's income must be equal to it's expenditure because every transaction has a buyer and a seller. It is also because every dollar of spending by some buyer is a dollar of income for some seller. Gross domestic product (GDP) measures an economy's total expenditure on newly produced goods and services and the total income earned from the production of these goods and services.
Why aggregate income is equal to aggregate expenditure?
One man's income is another man's expenditure. The expenditure of buyers on products is, by the rule of accounting, income to the sellers of those products. Every transaction that affects income must affect expenditure. If, for example, a company produces and sells one extra loaf of bread. This transaction will raise total expenditure on bread, but it also has an equal effect on income. If the company produces the extra loaf without hiring any more labour (such as making the production process more efficient), then profit increases. If the company produces the loaf by hiring more labour, then wages increase. In both cases, expenditure and income increase equally.
What is the proof that the expenditure function is homogeneous of degree 1?
The proof that the expenditure function is homogeneous of degree 1 lies in its property of exhibiting constant returns to scale. This means that if all input prices and income are multiplied by a constant factor, the total expenditure will also be multiplied by the same factor.
Why does unitary elastic demand curve is a rectangular hyperbola?
we know from total expenditure method of measuring elasticity of demand that if total expenditure remains the same when price changes, elasticity is unitary. rectangular hyperbola is a curve under which all rectangular areas are equal. also, each rectangular area shows total expenditure on the commodity. along the curve, even if price changes, total expenditure remains the same, so rectangular hyperbola shows the elasticity of 1.
How much tax will there be if there are 429.99?
The tax rate varies from region to region and also usually depends on whether the amount involved (429.99) is an expenditure, earned income, investment income.
What is IS curve?
It is the locus of combinations of the interest rate and the level of real national income for which desired aggregate expenditure equals actual national income.So called because, in a closed economy with no government, it also reflects the combinations of the interest rate and national income for which investment equals saving, I=S. In general, it reflects points for which injections equal withdrawals.
What is an IS curve?
It is the locus of combinations of the interest rate and the level of real national income for which desired aggregate expenditure equals actual national income.So called because, in a closed economy with no government, it also reflects the combinations of the interest rate and national income for which investment equals saving, I=S. In general, it reflects points for which injections equal withdrawals.
Psychological law of consumption?
Generally it is observed that when income increases, consumption also increases but by a less proportion than the increase in income. Suppose the total income of the community is 10 crore and the consumption expenditure is also Rs 10 crore. In that case, there is no saving and investment. Further the income increases to Rs.15 crore. Then, consumption also increases, but not to the extent of Rs15 crore. It may increase to Rs14 crore and Rs 1 crore constitutes the savings. This savings create a gap between Income and Consumption. This gap is in conformity with Keynes Psychological law of consumption, which states that, when aggregate income increases, consumption expenditure shall also increase but by a somewhat smaller amount". This law tells us that people fail to spend on consumption the full amount of increment in income. As income increases, the wants of the people get satisfied and as such when income increases they save more than what they spend. This law may be considered as a rough indication of the actual macro - behaviour of consumers in the short run. This is the fundamental principle upon which the Keynesian consumption function is based. It is based upon his observations and conclusion derived from the study of consumption function. This law is also called the fundamental law of consumption. It consists of three inter related propositions: # When the aggregate income increases, expenditure on consumption will also increase but by a smaller amount. 2. The increased income is distributed over both spending and saving. 3. As income increases, both consumption spending and saving will go up. These three prepositions form Keynes psychological law of consumption. As consumption expenditure progressively diminishes when income increases, a gap between income and expenditure arises. This tendency is so deep rooted in people's habits, customs, and the psychological set up that it is difficult to change in the short run. Hence, it is impossible to raise the propensity to consume of the people so as to increase the national output, income and employment. Increasing the volume of investment in an economy can only fill up the gap between income and Consumption.
Is budget an abstract noun?
Yes, the noun 'budget' is an abstract noun as a word for an estimate of income and expenditure for a set period of time; a plan for using money; a word for a concept.The noun 'budget' is a concrete noun as a word for a written statement of income and expenditure; a word for a physical thing.The word 'budget' is also a verb and an adjective.
What is the importance of expenditure approach in national income accounting?
The importance of expenditure apporach is that it results in the fact of expanding your generitsily factors of your financial spending. It also has many other benefits, please talk to your accountant for more info. Glad i could help! :)
Equal distribution of income and social services is also referred to as?
Democracy
Does disposable income decrease when income decreases?
yes because the disposable income it is necessary to determine total income so when income decrease does disposable income decrease also.
