National income – Understanding link between National Income Accounting and Determination

January30, 2017
by admin

National Income Accounting focuses on the measure of 1)Performance of an economy; and 2) Standards of Living in an economy. Throughout these two measures, students can see that GDP is a central indicator. Specifically, the rate of change of real GDP indicates economic growth, while the real GDP per capita captures material SOL. Hence, the next section on National Income Determination is concerned with how the equilibrium level of GDP is obtained. We learn that 3 models (circular flow, AD/AS, AE/Y) can be used, each with their own unique application.

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