4.1 National Income Statistics Flashcards
What is the definition of National Income?
The total value of all goods and services produced in an economy over a given period
What are the three national income statistics?
- GDP
- GNI
- NNI
What is the definition of GDP?
The total final value of goods and services produced within a countries boarders
What is the definition of GNI?
The total final value of goods and services produced by the citizens of an economy regardless of whether their located abroad or domestic
What is the difference between market prices and basic prices?
- Market prices is the price charge to consumers with the added indirect tax
- The basic price is the initial price charged without the tax
How do we measure/calculate NNI?
NNI = GNI - Depreciation
What is depreciation?
The reduction in the value of capital goods over time
What is the difference between nominal and real GDP?
Real GDP is adjusted for inflation whilst nominal isn’t
What is GDP per capita?
GDP divided by the total population, indicating average income per person
What do these national income statistics not account for?
Informal Activity/Employment
Why are these national income statistic important?
They help measure economic performance, compare living standards, and guide policy decisions.
What type of prices does GDP typically use?
Market prices
What is the main purpose of calculating NNI?
To measure the income available to residents of a country after depreciation.
Which statistic is used most commonly to compare economic performance across countries?
GDP
What is the relationship between GDP and economic growth?
GDP growth indicates an increase in the economic performance of a country.
