Measuring A Nation's Income

Question 0

What’s a transfer payment?

Why isn’t it part of G in GDP?

Answer 0

A payment for which no good or service is exchanged

Bc GDP is intended to measure income from, and expenditure on, the production on G and S

Question 1

What is GDP?

Answer 1

The market value of all final goods and services produced within a country in a given period of time

Question 2

What are net exports?

Answer 2

Spending on domestically produced goods and services by foreigners (exports) minus spending on foreign goods by domestic residents (imports)

Question 3

GDP at constant prices

Answer 3

GDP calculated using prices that existed at a particular base year which takes into account changes in inflation over time

Question 4

GDP at current/market prices

Answer 4

GDP calculated by multiplying the output of G and S by the price of those G and Ss in the reporting year

Question 5

GNP

Answer 5

Total income earned by nations permanent residents

Question 6

NNP (Net national product)

Answer 6

GNP - losses from depreciation

Question 7

National income

Answer 7

Total income earned by nations residents in the production of G and S

Excludes indirect business taxes and including business subsidies

Question 8

Personal income

Answer 8

Income that households and non-corporate businesses receive

Excludes retained earnings (income corporations earned)
Subtracts corporate income taxes and contributions to social insurance
Includes interest income that households receive from holdings of gov transfer programmes

Question 9

Nominal GDP

Answer 9

Production of G and S valued at current prices

Question 10

GDP deflator

Answer 10

Measure of price level calculated as ratio of nominal GDP to real GDP x 100

It reflects the prices of G and S but not quantities produced