GDPVValue Added and Income e3. GDP is the Sum of incomes in the Economy During a Given Period o Some of the revenues are collected by the government in the form of taxed on sales such taxes are called indirect taxes o Some of the revenues go to pay workers this component is called labor income The rest goes to the firm--that component is called capital income 2003-6-22 6
2003-6-22 6 GDP,Value Added,and Income 3.GDP is the Sum of incomes in the Economy During a Given Period. ⚫ Some of the revenues are collected by the government in the form of taxed on sales— such taxes are called indirect taxes. ⚫ Some of the revenues go to pay workers— this component is called labor income. ⚫ The rest goes to the firm—that component is called capital income
The Composition of/ U.S. GDP by Type of Income (in percent 1960 1998 Labor income% 65 Capital income26% 27% ndirect taxes 8% 8% 2003-6-22 7
2003-6-22 7 The Composition of U.S. GDP by Type of Income (in percent) 1960 1998 Labor income 66% 65% Capital income 26% 27% Indirect taxes 8% 8%
Summarize You can think about aggregate output--about GDP,in three different but equivalent ways From the output side: GDP is equal to the final goods and services produced in the economy during a given period Also from the output side GDP is the sum of value added in the economy during a given period o from the income side gdP is the sum of incomes in the economy during a given period 2003-6-22 8
2003-6-22 8 Summarize You can think about aggregate output--about GDP—in three different but equivalent ways. ⚫ From the output side:GDP is equal to the final goods and services produced in the economy during a given period ⚫ Also from the output side:GDP is the sum of value added in the economy during a given period ⚫ From the income side:GDP is the sum of incomes in the economy during a given period