GDP - National Income

Question 1

Is used products sold considered in GDP? yes or no

Answer 1

No, GDP includes only those items that are traded in markets.

Question 2

What is Gross domestic product (GDP)?

Answer 2

The market value of all the final goods and services produced within a country in a given time period.

Question 3

What are the Factors of Production? (4)

Answer 3

• Land
• Labor
• Capital
• Entrepreneurship

Question 4

What household receive what income?

Answer 4

• Labor earns wages.
• Capital earns interest.
• Land earns rent.
• Entrepreneurship earns profits.

Question 5

Is expenditure equal to income?

Answer 5

Yes, Because firms pay out everything they receive as incomes to the factors of production (Y), total expenditure equals total income.
That is: Y = C + I + G + NX
The value of production equals income equals expenditure.

Question 6

Is, GDP = Expenditure = Income?

Answer 6

Yes

Question 7

What is consumption expenditure?

Answer 7

Consumption expenditure is the total payment for consumer goods and services, shown by the red flow labelled C.

Question 8

Real GDP

Answer 8

Real GDP is the value of the final goods and services produced in a given year expressed in the prices of the base year.

Question 9

Nominal GDP

Answer 9

Nominal GDP is the value of the final goods and services produced in a given year expressed in the prices of that same year.