Macroeconomics

Question 1

5 government macroeconomic aims (5)

Answer 1

economic growth - steady increase in national output/income

employment - low unemployment

price stability - low + stable inflation

reduce national debt -

income distribution - equitable support

Question 2

Output method to measure national income

Answer 2

measures value of good/services produced

Question 3

Income method to measure national income

Answer 3

measures value of all income earned in economy

Question 4

Expenditure method to measure national income (5)

Answer 4

value of all spending on goods/services

consumption - spending by households

investment - spending by firms

government - spending by governments

net exports - spending by foreigners on
exports - spending on imports

Question 5

Define GDP (3)

Answer 5

gross domestic product

total value of all final goods/services produced in an economy in a year

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

Question 6

Define GNI (3)

Answer 6

gross national income

total income earned by country’s FOPs regardless of location of assets

GDP + net property income from abroad

Question 7

Limitations of national income statistics (2)

Answer 7

inaccurate - information can come from a wide range of sources

un(under)recorded economic activity - national income only records official economic activity