Gross Measures - Economic Activity

Question 1

Define “national income (NI)”.

Answer 1

The total payments for economic resources included in all production (but not including taxes as a payment).

Question 2

Define “personal disposable income”.

Answer 2

Amount of income that individuals have available for spending, defined as total personal income after taxes are deducted.

Question 3

Identify important gross measures used in macroeconomics.

Answer 3

Measures of total activity or output in an economy including:
Nominal Gross Domestic Product (GDP);
Real Gross Domestic Product;
Potential Gross Domestic Product;
Gross National Product (GNP);
Net National Product;
National Income;
Personal Disposable Income.

Question 4

Define “potential gross domestic product (potential GDP)”.

Answer 4

The maximum final output that can occur in the domestic economy at a point in time, without creating upward pressure on the general level of prices in the economy.

Question 5

Define “net national product (NNP)”.

Answer 5

Total output of all goods and services produced worldwide using economic resources of U.S. entities, but only including the cost of investment in new capital (excludes depreciation).

Question 6

Define “gross national product (GNP)”.

Answer 6

Total output of all goods and services produced world-wide using economic resources of U.S. entities.

Question 7

Define “real gross domestic product (real GDP)”.

Answer 7

Total output of final goods and services produced for exchange in the domestic market during a period (usually a year), measured at constant prices.

Question 8

Define “nominal gross domestic product (nominal GDP)”.

Answer 8

Total output of final goods and services produced for exchange in the domestic market during a period (usually a year), without adjustment for changing price levels.