Economics presentation Assignment g

1. Future Talent Academy
Economics Assignment
Submitted by :
-Limor Minilik
-Soliana Getachew
-Nahom Deresse
-Nathnael Dawit
-Nathnael Berihun
-Nathan Teshome

2. Group 4
1. Consumer Price Index
(CPI)
2. Difference between CPI
and GDP Deflator
3. Other measures of
National Income
accounting
4. Types of Income
4
3
2
1

3. 1. Consumer Price Index (CPI)
• CPI is an important economic metric.
• CPI measures the average change in prices paid by
consumers over a given time for a basket of goods and
services.
• The index is calculated and published monthly by the
Bureau of Labor Statistics.
Formula:
Cost of baskets of goods in the current year
Cost of basket of goods in the base year

4. 2. Difference between CPI and GDP
Deflator
Consumer Price Index (CPI) GDP Deflator
 Measures price of only goods &
service bought by consumers
 Measures price of all goods &
services produced
 It uses a fixed basket of goods over
time
 It changes the basket of goods
 Includes foreign goods  Measures only domestic goods
 Increase in price affects it  An increase in price of goods bought
by firms or government will show

5. 3. Other measures of National Income accounting
- We have also common measurement other than GDP
in the economy, some are:
1. Net Domestic Product (NDP)
2. National Income (NI)
NI= Compensation of employees + Proprietors income +
Corporate profit +Rental Income +Net Interest

6. 3.1 Compensation of Employees – consists of wages (daily
income) & salaries (fixed income) which are paid for
employees plus employees contribution to society &
monetary value of other forms of benefit.
3.2 Proprietor income – is all forms of income that is
earned by self-employed individuals.
3.3 Corporate Profit – is income earned by share holders of
corporations. This is called “Undistributed Profit” or
“Retained rental income”
3.4 Personal Rental Income – income received by
individuals for use of non-monetary assets.
3.5 Net Interest – is interest income received by a given
countries citizens and government minus interest paid out
to the rest of the world.

7. Types of Income
1. Personal Income – is a measure of income that
people actually received.
Personal income= National income – earned income but
not received
2. Disposable Income – is a portion of personal income
that can be used for consumption or saving.
Disposable income= Personal income – Personal tax
3. Precapita GDP – shows the amount of GDP per person.
• Precapita GDP= GDP/Population
• Precapita NGDP= NGDP/Population
• Precapita RGDP= RGDP/Population