National Production and Income
Overview
Production is the amount of goods and services that are produced by an economy over a given time frame. (typically a year)
As a general rule, production is measured as the amount of goods or services purchased. That is, most measures of production
have no way to include goods that are produced but not bought during the given period.
Because any money spent on a product or service becomes income to the producer, nation production
is (broadly speaking) equivalent to income.
The
National Accounts equation breaks production into a set
of components.
Closed Economy
The starting point to understanding national production and income is to consider the economy that has no foreign trading partners.
Such an economy is called a closed economy.
- Modeling Mathematical description of production
- Income and Employment : Income is the money
earned from selling the result of economic production. Employment represents the amount of human labor
required for production.
- Growth :
represents the increase (or decrease) over time
of an economies total production (and hence income).
- Business Cycles : studies the cyclical nature
of production and income in the economy, and policies designed to mitigate those cycles.
Open Economy
An open economy is one which trades with other countries.
(see
International Economics)
