GDP and GNI

Question 1

GDP(gross domestic product)

Answer 1

Market value of all final goods and services produced within a given period

Question 2

What is the expenditure method

Answer 2

Total amount of spending to buy final goods and services

Question 3

What is the equation for the expenditure method

Answer 3

GDP=C+I+G+(X-M)

Consumption+investment+government spending+(exports-imports

Question 4

What is the income approach?

Answer 4

Adding all factors of income(rent, interest, wages, profits)

Question 5

What is the equation for the income approach?

Answer 5

R+I+W+P=national income

Question 6

What is GNI(gross domestic income)

Answer 6

GDP + net income from abroad. Income produced by nationals of country sent back to the home country minus income from foreign nationals send abroad

Question 7

What is real income?

Answer 7

Takes inflation into consideration

Question 8

What is nominal income

Answer 8

Monetary amount(everything without inflation)

Question 9

What is PPP(purchasing power parity)

Answer 9

Special exchange rates that makes buying power of each currency equal to the buying power of 1$ USD. This eliminates the difference in price level across countries