GDP/GNP（GNI）

Question 1

Define GDP

Answer 1

Gross domestic product (GDP):

The value of all final goods and services produced within an economy over a period of time, usually a year or a quarter.

Question 2

Advantages and disadvantages of GDP

Answer 2

Advantages of GDP:
- Allows comparisons between countries 
-  Informs policy makers
- Gives an indication of average income

Disadvantages of GDP:
- Over estimates the quality of life
- Does not account for disparity in income distribution
- Contents inaccuracies
- Does not account for improvements in quality of outputs

Question 3

GDP calculations (nominal)

Answer 3

3 ways to calculate GDP：

• The output method
  Add all output (value which added in each stage only)

Agriculture
Manufacturing
Financial services
Total

• The income method
  Add up all the incomes from the factors of production or factor payments. These are wages, rent, interest and profits.

Compensation of employees
Profit
Taxes less subsidies
Total

• The expenditure method
  GDP = C + I + G + (X - M)

C is consumption expenditure
I stands for investment spending.
G is government expenditure
(X - M) or NX stands for net exports or trade balance.

Question 4

Real GDP and Nominal GDP

Answer 4

Real GDP=
(nominal GDP / Price deflator ) x 100

• nominal GDP growth adjusted for inflation

Question 5

GDP per capita

GNP or GNI per capita

Answer 5

GDP per capita
= Total GDP / the population

GNI per capita
= Total GNI / the population
(GNP = GNI)

Question 6

PPP or GDP PPP

GDP by purchasing power

Answer 6

Purchasing power parity PPP. This indicator will tell us the size of an economy by its power to purchase goods and services within that country

GDP PPP, GNI PPP

Question 7

GNI / GNP

Answer 7

Gross national income (GNI): The income earned by old national factors of production independently of where they are located over a period of time. It is equal to GDP plus factor income earned a board minus factor income paid abroad.

GNI = GDP + incomes flowing in from other countries - incomes flowing out to other countries 

Question 8

Business cycle

Answer 8

The short-term fluctuation of real GDP around it’s long-term trend (or potential output)

An expansionary phase (Expansion)
A peak phase (Boom)
A contractionary phase (Contraction)
A trough (Bust)

Question 9

Measures of well-being

Answer 9

GDP and GNI as a measure of economic well-being:

• comparisons over time
• comparisons between countries

 Alternative measures of well-being:

Would Happiness Report 
- Cantril ladder

OECD Better Life Index(BLI)
11 indicators across 35 countries which are members of the Organization for Economic Cooperation and Development
Housing, income, jobs, community education, environment, civic engagement health, life satisfaction, safety, work-life balance

Gross National Happiness (GNH)
4 pillars guide the 9 domains 
- Conservation of environment 
- sustainable and equitable socioeconomic development 
- preservation and promotion of culture 
- good governance

Happy Planet Index (HPI)
~
(Life expectancy x experienced well-being x inequality of outcomes) / ecological footprint

Green GDP

Question 10

Green GDP (GGDP)

Answer 10

The green gross domestic product (green GDP or GGDP) Is an index of economic growth with the environmental consequences of that growth factored into a countries conventional GDP. Green GDP monetizes the loss of biodiversity and accounts for costs caused by climate change.