...NATIONAL INCOME AND MACROECONOMICS 1 National Income 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. Alfred Marshall in his ‘Principle of Economics’ (1949) defines National income as “The labour and capital of a country, acting on its natural resources, produce annually a certain net aggregate of commodities, material and immaterial, including services of all kinds…..and net income due on account of foreign investments must be added in. This is the true net National income or Revenue of the country or the national dividend.” Irving Fisher defined national income as “The national dividend or income consists solely of services as received by the ultimate consumers, whether from their material or from human environments. Thus, a piano or an overcoat made for me this year is not a part of this year’s income, but an addition to capital. Only the services rendered to me during this year by these things are income.” Central Statistical Organization defines National income as “National Income is the sum of factor income earned by the normal residents of a country in the form of wages, rent, interest and profit in an accounting year.” Concepts of National Income There are different concepts of National Income, namely; GNP, GDP, NNP...
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...NATIONAL INCOME AND MACROECONOMICS 1 National Income 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. Alfred Marshall in his ‘Principle of Economics’ (1949) defines National income as “The labour and capital of a country, acting on its natural resources, produce annually a certain net aggregate of commodities, material and immaterial, including services of all kinds…..and net income due on account of foreign investments must be added in. This is the true net National income or Revenue of the country or the national dividend.” Irving Fisher defined national income as “The national dividend or income consists solely of services as received by the ultimate consumers, whether from their material or from human environments. Thus, a piano or an overcoat made for me this year is not a part of this year’s income, but an addition to capital. Only the services rendered to me during this year by these things are income.” Central Statistical Organization defines National income as “National Income is the sum of factor income earned by the normal residents of a country in the form of wages, rent, interest and profit in an accounting year.” Concepts of National Income There are different concepts of National Income, namely; GNP, GDP, NNP...
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...CONCEPTS OF NATIONAL INCOME The total net value of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation. The important concepts of national income are: 1. Gross Domestic Product (GDP) 2. Gross National Product (GNP) 3. Net National Product (NNP) at Market Prices 4. Net National Product (NNP) at Factor Cost or National Income 5. Personal Income 6. Disposable Income Let us explain these concepts of National Income in detail. 1. Gross Domestic Product (GDP): Gross Domestic Product (GDP) is the total market value of all final goods and services currently produced within the domestic territory of a country in a year. Four things must be noted regarding this definition. First, it measures the market value of annual output of goods and services currently produced. This implies that GDP is a monetary measure. Secondly, for calculating GDP accurately, all goods and services produced in any given year must be counted only once so as to avoid double counting. So, GDP should include the value of only final goods and services and ignores the transactions involving intermediate goods. Thirdly, GDP includes only currently produced goods and services in a year. Market transactions involving goods produced in the previous periods such as old houses, old cars, factories built earlier are not included in GDP of the current year. Lastly, GDP refers...
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...Name Institution Instructor Title Describe the terminology of macroeconomics including GDP, GNP, national income business cycles, monetary policy, fiscal policy, inflation and unemployment Macroeconomics is a broad sub-field of economics that establishes the behavior, outlook and structure, collective and established decision making system of an economy at large and usually involves national economies, regional and global economies with little or no involvement of the individual markets. Gross National Product is a determining tool in macroeconomics that measures a nation’s economy and status through international investments and residents working over-seas. GNP excludes any product values produced by foreign investors within the country. GNP is a great indicator in macroeconomics when assessing economic progress in comparison with Gross Domestic Income. (Clark & Montjoy, 2001) Macroeconomics uses GDP to determine the value of all market products and services produced within a given boundary usually a nation in a period of one year. At every stage of production, the value of all goods is added and the economic growth established based on the previously assessed standards. Macroeconomists explain that unemployment tends to reduce with a rising GDP rate since the output is increased and thus need for more skilled and unskilled labor force. Inflation gives an explanation on the rate at which product prices increase over time. Macroeconomists study this phenomenon...
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...American InterContinental University FINA310-1301A-02: Professor Michael James Micro Chip Computer Corporation 1. To calculate the percentage growth, one must do the following: • Find the present year’s sales and the previous year’s sales. • Subtract the previous year’s sales from the present year’s sales. • Then, divide the answers by the previous year’s sales. • To turn it into a percentage, multiply the decimal by 100 (Brooks, 2010). With that being said, Net Sales for 2004 through 2008 are as follows: 2004: $11,062 2005: $11,933 (11933-11062)*100/11062=7.87% 2006: $9,181 (9189-11933)*100/11933= -23% 2007: $6141 (6141-9181)*100/9181= -33.11% 2008: $8,334 (8334-6141)*100/6141= 35.71% 2009: $9,167.40 (8334*.10) =833.4+8334=$9,167.40 2. The revenue that is expected for 2009 is $9,167.40. According to the annual percentage growth rate, it is not likely that the business will reach its sales prediction. For 2008, the business had a very large growth rate. This business had a small growth rate that was barely more than 2 % of the 10 % goal for 2005, and a somewhat strong negative growth for 2006 and 2007. The sales trend is pointing downwards. Following 2005, the average annual growth rate has been -3.15 % during the last 4 years. According to the financial data sheet, I do not feel that Micro Chip Computer Corporation will achieve a 10 % sales goal for 2009. 1. Current % of Sales 2008/2009 Prediction Sales $8,334-$10,000 Cost of Sales $5...
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...following elements to solve: a. What is the mission of the nonprofit? b. What “clues” exist in the narrative that distinguish the nature and/or mission of the nonprofit? c. How do the “clues” in the narrative “match” the financial information provided in the financial section? 3. EXAMPLE: a. Mission of nonprofit organization: i. The Ford Foundation is a charitable organization that has a mission of granting proceeds…. b. What “clues” exist in the narratives that distinguish the nature and/or mission of the nonprofit? i. The Ford Foundation has a large pool of investments and/or endowment; income is provided strictly from endowment; capital appreciation is classified as non-operating income; c. How do the “clues” in the narrative “match” the financial information provided in the financial section? i. Column 4 has a large investment category of $6 Billion; Column 4 has no inventory balance since the Ford Foundation only provides grants and no direct services; most of the revenue from Column 4 has been classified as non-operating… this is consistent with the narrative for the Ford Foundation d. CONCLUSION: i. The best match for the Ford Foundation is Column 4; Boston Symphony Orchestra: 9 The BSO is a charitable organization that provides live musical performances...
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...1. Three Types of Income (on Final) a. Active (earned) income b. Passive income - income derived from a passive activity such as working interest in oil and gas, often associated with limited partnerships i. Can only deduct passive losses to the extent you have passive income c. Portfolio income (interest, dividend, annuities, sales of stocks and bonds, royalties not derived from an ordinary course of a trader business) 2. In –class quiz d. Owned a apartment complex ii. What is gross rental income 1. Tenant improvements in lieu of rent 2. Tenant improvement are not in lieu of rent iii. Two troublesome tenants, one comes and tell the landlord that they can’t pay the rent. Gives an interest bearing 90 day note in lieu of the rent. This note is treated as property and should be valued at FMV (fair market value) iv. Tenant hasn’t been in the apartment the entire month of December and has not paid rent. Paid late, landlord received in January 3. Include the rent in previous year’s taxable income v. Own a ten-flat in the city. Landlord lives in one of the ten, rent the other nine out. What is the net rental income? What about the deductions 4. What fractions of the building can you depreciate? 90% vi. Had inside information down in Springfield that a third airport was going to be built in the Chicagoland area. With this inside the...
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...-school teachers -in excellent health/wife in good health -earn about 60,000 per year -active life style -plan to retire at age 62 -will receive pensions equal to 65%of their annual salaries, plus Social Securitybenefits amounting to 20%of annual salaries. -savings account -equity in home Objectives: Return Requirements: Mr. Franklin and his wife don’t have a large amount of cash but they do have a fairly decent amount in assets. Risk Tolerance: Mr. Franklin is in excellent health and his wife shows to be in good health, which means they should have a long life expectancy. They have a high income together which shows they have a greater propensity to undertake risk because their incomes can help cover any shortfall. Constraints: Liquidity needs:...
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...my lecture is about to would you be happier if you were richer. Most people believe that they would be happier if they were richer, but survey evidence on subjective well-being is largely inconsistent with that belief. Subjective well-being is most commonly measured by asking people, All things considered, how satisfied are you with your life as a whole these days? or Taken all together, would you say that you are very happy, pretty happy, or not too happy? An alternative method asks people to report their feelings in real time, which yields a measure of experienced affect or happiness.Increases in income have been found to have mainly a transitory effect on individuals_ reported life satisfaction. Moreover, the correlation between income and subjective wellbeing is weaker when a measure of experienced happiness is used instead of a global measure. More importantly, the focusing illusion may be a source of error in significant decisions that people make. Evidence for the focusing illusion comes from diverse lines of research. For example, Strack and colleagues reported an experiment in which students were asked:How happy are you with your life in general? And How many dates did you have last month? The correlation between the answers to these questions was.When they were asked in the preceding order,but the correlation rose to 0.66(zero point sixty six) when the order was reversed with another sample of students. Similar focusing effects were observed when attention was first...
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...for a high absolute return. A key point is that the numbers are a result of the business operations; the business operations are not the result of the numbers. By this I mean that trying to make investment decisions on an individual security needs analysis that goes further than spitting back what a company’s net income might be and how that translates into a higher or lower multiple of earnings. The security I am discussing today is Starbucks (SBUX) common equity (SBUX also has corporate bonds). Starbucks Corp. is a seller of coffee, tea, and related products and beverages. Starbucks is a retailer, a licensor, and a wholesaler, which are all completely different kinds of businesses in that they have economic characteristics that result in vastly different operating margins. In analyzing the common stock of SBUX, the investor must understand what drives top line growth, operating income, and bottom line earning power of the company. During the second quarter of 2008, SBUX suffered their worst operating performance since the company went public in June of 1992. Top line revenue was up 12% to 2.526 billion, operating income fell 26.1% to 178.2 million and net income fell 21% to 108.7 million. However, these numbers do not stand alone. One must analyze the financial information further to get a better understanding of the strengths and weaknesses of the entire SBUX business model. First, a key number is the percentage of revenue that is generated from company owned stores (I also...
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...the value of a ratio over time to see if it is improving or deteriorating. Example: "The analysis of financial information, trend analysis is the presentation of amounts as a percentage of a base year. Example: The trend of a company’s revenues, net income, and number of clients during the years 2001 through 2007, trend analysis will present 2001 as the base year and the 2001 amounts will be restated to be 100. The amounts for the years 2002 through 2007 will be presented as the percentages of the 2001 amounts. In other words, each year’s amounts will be divided by the 2001 amounts and the resulting percentage will be presented. For example, revenues for the years 2001 through 2007 might have been $31,691,000; $40,930,000; $50,704,00; $63,891,000; $79,341,000; $101,154,000; $120,200,000. These revenue amounts will be restated to be 100, 129, 160, 202, 250, 319, and 379. Let’s assume that the net income amounts divided by the 2001 amount ended up as 100, 147, 206, 253, 343, 467, and 423. The number of clients when divided by the base year amount are 100, 122, 149, 184, 229, 277, and 317. From this trend analysis we can see that revenues in 2007 were 379% of the 2001 revenues, net income in 2007 was 467% of the 2001 net income, and the number of clients in 2007 was 317% of the number in 2001. Using the restated amounts from trend analysis makes it much easier to see how effective and efficient the company has been during the recent years". Trend analysis can also include the...
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...royalty on all sales, and make additional payments as Davanrik completed each stage of the approval process. Merck In 2000, Merck & Co., Inc. was a global research-driven pharmaceutical company that discovers, develops, manufactures and markets a broad range of human and animal health products, directly and through its joint ventures, and provides pharmaceutical benefit management services (PBM) through Merck-Medco Managed Care. Since 1995, Merck had launched 15 new products including Vioxx™ for the treatment of osteoarthritis, Fosamax™ for the treatment of osteoporosis and Singulair™ for treating asthma. The Company earned $5.9 billion on 1999 sales1 of $32.7 billion, about a 20% increase from 1998. Exhibits 1 and 2 contain Merck’s Income Statement and Balance Sheet. A handful of Merck’s most popular drugs, Vasotec™, Mevacor™, Prinivil™, and Pepcid™, generated $5.7 billion in worldwide sales. The patents for these drugs, however, would expire by 20022. Once the patents expired, Merck anticipated that the sales of these drugs would decline substantially as generic substitutes became available. The only way to...
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...consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and competitive product and pricing pressures; risks related to the assets acquired and liabilities assumed in the acquisition, as well as the integration, of Coca-Cola Enterprises Inc.'s former North American business; continuing uncertainty in the credit and equity market conditions; increased competition; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; increases in income tax rates or changes in income tax laws; increases in indirect taxes or new indirect taxes; our ability and the ability of our bottling partners to maintain good labor relations, including the ability to renew collective bargaining agreements on satisfactory terms...
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...However, according to the charts putting for a ten year plan puts plan to disagreeing with what president Obama has already proposed. Again so we can grow those industries in a positive way for better income growth for education and substantial for combined contrast for the other side of the isle. Compromise I look forward at taking a look at overall captions and overall outcomes for a commitment so that more jobs will not be cut off and I believe that spending on the revenue side that if congress would include and suggest the total military percentage the i.e. coal increasing the size making it very hard to eat. I think that it is necessary that 18 to 22 year old stop dragging their feet on the ground and take enough topsoil off the top and make more sense about what drives America’s politics because the charts are up and as you know Ronald Reagan signed off on something gas prices where back in the day .5 cents a gallon. I think there’ s traditionally a lot of room an a lot of information missing uncertainty having to face a lot of damage and we as doctors and pastors see a 33% change and that employs about 33 million people in America half of those small businesses however, what happens is the second half of the night is tax and It is insanity in fact, if we increase or raise revenue over time, but the fact of matter is, increasing tax 1.9 trillion dollars the spending cuts what you have. Economics challenges long lines 50 to 70 years cultural projectiles that small business...
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...generally accepted methods: the percentage-of-completion method including units of delivery and the completed-contract method. The determination of which of the two methods is preferable is based on a careful evaluation of circumstances because the two methods should not be acceptable alternatives for the same circumstances (ASC 605-35-25-1).” LabCo agreed to build a six-axis laser-cutting machine for Halibut. The contract entered into was a fixed price contract. A fixed price contract is, “An agreement to perform all acts under the contract for a stated price” (ASC 605-35-15-4). LabCo decided to use the percentage of completion method for recognizing income. “The percentage of completion method recognizes income as work on a contracts progress” (ASC 605-35-25-51). Income recognized shall be that percentage of estimated total income, either: “That incurred costs to date bear to estimated total costs after giving effect to estimates of costs to complete based on...
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