Page 31 - Macroeconomics. book docx_Neat
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13. Understand how national income is related to economic growth.
14. Recognize the role of national income in government planning and policy making.
Key Terms
National Income: The total income earned by all factors of production in an economy
during a specific period.
Factors of Production: Inputs used in production, including labor, land, capital, and
entrepreneurship.
Labor: Human effort, both physical and mental, used in the production of goods and
services.
Wages and Salaries: Payments made to workers in return for their labor.
Land: Natural resources used in production, such as agricultural land and minerals.
Rent: Income earned from land and natural resources.
Capital: Man-made resources used in production, including machinery and equipment.
Interest: Income earned by owners of capital for lending or investing resources.
Entrepreneurship: The ability to organize production, combine resources, and take risks.
Profit: Income earned by entrepreneurs as a reward for risk-taking and management.
GDP (Gross Domestic Product): The total market value of all final goods and services
produced within a country.
Economic Performance: The overall condition of an economy measured by income and
output indicators.
Living Standards: The level of material well-being and access to goods and services.
Income Distribution: The way national income is shared among individuals or groups in
society.
Introduction
National income is a core concept in macroeconomics that explains how the value
created by production is transformed into income earned by individuals and firms. After
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