Core Concepts and National Accounts

Question 1

What are the three approaches to calculating GDP?

Answer 1

Expenditure (C+I+G+NX), Income (wages + profits + rent + interest), Output (value added by each sector)

Question 2

Define nominal vs real GDP.

Answer 2

Nominal GDP uses current prices; Real GDP adjusts for inflation using a base year

Question 3

What is GNP and how is it different from GDP?

Answer 3

GNP includes income from nationals abroad; GDP includes all income within borders.

Question 4

What is the GDP deflator?

Answer 4

A measure of inflation: (Nominal GDP / Real GDP) × 100.