Economics P3 Flashcards
(10 cards)
What is gross domestic expenditure?
Total expenditure on final goods and services within a country in a given period
Gross domestic expenditure reflects the overall economic activity in a country.
What is nominal GDP?
GDP at current prices, representing the current value of prices and figures as they are
Nominal GDP does not account for inflation.
What is real GDP?
GDP at constant prices, adjusted for price changes and inflation
Real GDP provides a more accurate reflection of an economy’s size and how it’s growing over time.
What are the three methods of calculating GDP?
- Production method
- Income method
- Expenditure method
Each method provides a different perspective on economic activity.
What are national accounts used for?
- Indicating economic activity within a country
- Determining the standard of living
- Comparing prosperity levels among countries
National accounts are essential for economic analysis and policy-making.
What is gross domestic income?
Total remuneration for factors of production used during production processes within the country
Gross domestic income reflects the income generated by domestic production.
What is gross national income?
Total remuneration for factors of production received by people of South African nationality
Gross national income includes income earned by nationals, regardless of where it is generated.
How do you convert factor prices to basic prices?
Add taxes on production and subtract subsidies on production
This conversion is necessary for understanding the cost structure in an economy.
How do you convert basic prices to market prices?
Add taxes on products and subtract subsidies on products
Market prices reflect what consumers actually pay, including taxes and subsidies.
How do you convert market prices back to basic prices?
Add subsidies on products and subtract taxes on products
This conversion helps in analyzing the underlying production costs.
