Gross Measures - Economic Activity

Question 1

Identify important gross measures used in macroeconomics.

Answer 1

Measures of total activity or output in an economy including:

1. Nominal Gross Domestic Product (GDP)
2. Real Gross Domestic Product
3. Potential Gross Domestic Product
4. Gross National Product (GNP)
5. Net National Product
6. National Income
7. Personal Disposable Income

Question 2

Define “national income (NI)”.

Answer 2

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

Question 3

Define “net national product (NNP)”.

Answer 3

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 (excluders depreciation).

Question 4

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

Answer 4

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.

Question 5

Define “gross national product (GNP)”.

Answer 5

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

Question 6

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

Answer 6

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

Question 7

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

Answer 7

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 8

Define “personal disposable income”.

Answer 8

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