4.1 National Income Statistics

Question 1

What is National income

Answer 1

National income is the country’s output

Question 2

Gross domestic product (GDP)

Answer 2

The total market value of final goods and services produced within a given period by factors of production located within a country

Question 3

Methods of measuring GDP

Answer 3

1. The output method
2. The expenditure method
   - Personal consumption expenditure (C)
   - Gross private domestic investment (I)
   - Government expenditure (G)
   - Net Export (X-M)
3. The income method

Question 4

Gross National Income (GNI)

Answer 4

Measures the value of income from a country’s owned factors of production over a given period of time, usually one year

GNI = GDP - Net Factor income from abroad

Net factor income from abroad = factor income received from abroad - factor income paid to abroad

Question 5

Uses of national income statistics

Answer 5

1. Use to measure rate of economic growth
2. Helps the government to plan its economy since it provides useful info for planners
3. Shows the progress of the economy over a given period by comparing national income