Measuring GDP

Question 1

What is GDP?

Answer 1

The total value of the domestic output of an economy over a given period of time.

Question 2

What is GNI?

Answer 2

GDP adjusted for net property income from abroad.Income earned by UK owned assets in other countries is addition.Income earned by foreign owned assets is subtraction.

Question 3

When is macroeconomic equilibrium achieved?

Answer 3

It is achieved when withdrawals from the circular flow of income equal the injections into the circular flow.It is the real level of output where AD=AS.C+I+G=S+T+M.No tendency for income/output/expenditure or the price level to rise or fall.

Question 4

When is there a net withdrawal from circular flow

Answer 4

When leakages>injections.Leads to a fall in the equilibrium level of national income of an economy.

Question 5

When is there net injection?

Answer 5

When injections>withdrawals.Leads to a rise in the equilibrium level of national income in the economy.

Question 6

Real Gdp Vs Nominal GDP

Answer 6

Real is adjusted for the effects of inflation.Whereas nominal is in current prices.Increases in Real GDP indicate short run economic growth.

Question 7

What does the BOP current account easure?

Answer 7

The total value of inflows into the domestic economy from abroad-the total value of outflows out of the domestic economy to rest of the world.

Question 8

What does budget balance measure?

Answer 8

Inflows of income to government-outflows of income from the government.