Circular flow of income

National Income

• measures the total value of g+s produced by an economy, over a period of time.
• Net NI is NI- depreciation of assets: depreciating assets produce less in the future. Net measures are more reliable as they indicate the current as well as future potential productive capacity.
• Measuring the level and rate of growth is important when considering: where the economy is in the business cycle, what the future potential of the economy is, level of s.o.l, comparing countries.

GDP

• the value of final output of all…