GDP INCOME APPROACH Gross Domestic Product

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Presentation transcript:

GDP INCOME APPROACH Gross Domestic Product - Consumption of Fixed Capital = NDP or Net Domestic Product Net Domestic Product - Indirect business taxes - Net foreign factor income earned in US = NI or National Income

GDP INCOME APPROACH National Income - Corporate Income Taxes - Undistributed Corporate Profits - Social Security Contributions + Transfer Payments + Credit Card Spending beyond Income = PI or personal income

GDP INCOME APPROACH PI or Personal Income - PIT or Personal Income Tax = DI or Disposable Income DI is divided into two main components Personal consumption C Personal saving S

Circular Flow Combining both Taking GDP as equal to C, Ig, G, and Xn Or taking GDP as equal to the sum of all the income streams you arrive at the same sum. So it is possible to construct a circular flow model that incorporates all of these elements.