Interpreting National income and output measures

Question 1

What makes up the private sector

Answer 1

C + I

Question 2

What makes up the public sector

Answer 2

G

Question 3

What makes up the foreign sector

Answer 3

X - IM = NX

Question 4

Define contribution analysis and how its worked out

Answer 4

Contributions analysis is a method of analysing the effect that each component of GDP is having on the short run change in GDP and is worked out by dividing each component by GDP(t-1)

Question 5

Define economic welfare

Answer 5

Welfare gained from the consumption and production of goods and services

Question 6

What omissions are there from measures of national income

Answer 6

Hidden economy - black market accounts for 12% in the UK
Non-paid market activities - housework etc

Question 7

What are the advantages of using GNI over GDP for measures of welfare

Answer 7

Distribution of income will be included in GNI and not in GDP
Comparisons of GDP across countries are unreliable as different countries have different accounting systems and currencies require converting
GDP only measures material standards of living