National Income

Question 1

What is the most common measure of National Income?

Answer 1

The Gross Domestic Product (GDP) is the most common measure of National income in the world.

Question 2

What does a country’s GDP represent?

Answer 2

A country’s GDP is quite simply the measure of its entire income.

Question 3

Why is GDP significant?

Answer 3

It is the most widely recognised measure of a country’s economic performance and strength.

Question 4

Are there other ways to measure National Income?

Answer 4

Yes, there are other ways of measuring the National Income.

Question 5

What does the GDP measure?

Answer 5

GDP measures the economic activity, stability, and growth of goods and services in an economy.

Question 6

How often do governments publish GDP figures?

Answer 6

Governments publish their GDP figures at quarterly intervals (every three months).

Question 7

What is the most important information regarding GDP?

Answer 7

The most important information is not the total amount but the growth rate.

Question 8

From which two angles is GDP usually reviewed?

Answer 8

GDP is usually reviewed from two angles: nominal and real.

Question 9

What is Nominal GDP?

Answer 9

Nominal GDP is a macroeconomic assessment of the value of goods and services using current prices in its measure.

Question 10

What is Real GDP?

Answer 10

Real GDP takes into consideration adjustments for changes in inflation.

Question 11

How does inflation affect Real GDP compared to Nominal GDP?

Answer 11

If inflation is positive, real GDP will be lower than nominal GDP, and vice versa.

Question 12

What does GNP stand for?

Answer 12

Gross National Product

Question 13

What does GNP measure?

Answer 13

The output produced by UK owned resources

Question 14

How is GNP calculated?

Answer 14

GNP = GDP + the value of output produced overseas by UK owned resources

Question 15

What must be subtracted from GNP?

Answer 15

The value of output produced in the UK by foreign owned resources

Question 16

What is Nominal GDP?

Answer 16

Nominal GDP is a macroeconomic assessment of the value of goods and services using current prices in its measure.

Question 17

What is Real GDP?

Answer 17

Real GDP takes into consideration adjustments for changes in inflation.

Question 18

How does inflation affect Real GDP compared to Nominal GDP?

Answer 18

If inflation is positive, real GDP will be lower than nominal, and vice versa.

Question 19

What does Gross National Product (GNP) measure?

Answer 19

GNP measures the output produced by UK owned resources.

Question 20

How is GNP calculated?

Answer 20

GNP is calculated by adding GDP to the value of output produced overseas by UK owned resources.

Question 21

What must be subtracted from GNP?

Answer 21

You must subtract the value of output produced in the UK by foreign owned resources.

Question 22

What does NNP stand for?

Answer 22

NNP stands for Net National Product.

Question 23

How is NNP calculated?

Answer 23

NNP is calculated by measuring the GNP less any depreciation.

Question 24

What does depreciation refer to in the context of NNP?

Answer 24

Depreciation refers to the loss in the value of capital goods during the year.

Question 25

What does NNP represent?

Answer 25

NNP represents the 'new' output, or the addition to the country's stock of goods (its wealth).

Question 26

What is the significance of NNP?

Answer 26

NNP is considered the true value of national income.

Question 27

What is Gross National Income (GNI)?

Answer 27

GNI is the total income received by the country from its residents and businesses regardless of whether they are located in the country or abroad.

Question 28

Why is GNI considered an accurate reflection of national wealth?

Answer 28

GNI may now be the most accurate reflection of national wealth given today's mobile population and global commerce.

Question 29

What are the three methods of measuring GDP?

Answer 29

The three methods of measuring GDP are the total output of the country, the total income, and the total spending.

Question 30

How do output, income, and expenditure relate in an economy?

Answer 30

Across an economy, output, income, and expenditure equal each other.

Question 31

What happens when you pay for an item?

Answer 31

If you pay a pound for an item, that money, your spending, instantly becomes someone else's earnings.

Question 32

What are the incomes earned by the owners of resources used in production?

Answer 32

The incomes include Rent, Wages, Interest, and Profit earned.

Question 33

What types of incomes should not be included in the calculation of production incomes?

Answer 33

Transfer incomes should not be included as those who receive them are not directly involved in producing output.

Question 34

What does national income expenditure include?

Answer 34

Expenditure on goods and services by individuals, firms, the government, and foreign buyers.

Question 35

What is deducted from national income expenditure?

Answer 35

Expenditure on imports is deducted as it represents output created by other countries.