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10 April, 15:10

There are a number of measures of aggregate economic activity, such as GDP, GNP, national income, personal income, and disposable personal income. Each of these measures can be a good indicator, depending on the issue under consideration. For each of the following issues, give your reasons for selecting one of the measures just mentioned as the best indicator to use in studying the issue: a. the proportion of income households save b. the relative share of earnings going to labor versus capital c. the total output of final goods and services

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  1. 10 April, 18:36
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    a. Disposable Personal Income

    b. National Income

    c. Gross National Product.

    Explanation:

    a. The best indicator to measure the proportion of income household saved is by Disposable Personal Income. It measures the proportion of income saved by household usually also expressed as (APS) Average Propensity to Save.

    b. The best indicator to measure the relative share of earning that are going to labor versus capital is by finding National Income. It includes wages, salaries and other benefits which are offered to labor. National Income is best measure to determine the compensation paid to labors also known as Labor Share.

    c. The best indicator to measure total output of final goods and services is Gross National Product (GNP). In an economy the total output includes all the goods and services produced in a country during a given period.
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