National income

Question 1

What is national income

Answer 1

The measure of the value of economic activity that has taken place in a given time period.

Question 2

What is national income referred to as

Answer 2

Gross domestic product (GDP)

Question 3

What is Nominal GDP

Answer 3

The money measurement of GDP at the prices of the output at that point in time

Question 4

What is real GDP

Answer 4

The money measurement of GDP adjusted to remove the effects of inflation. Measure of purchasing power of nominal GDP or the quantity of goods that could be bought with this amount of money.

Question 5

If the price level is rising over time this means…

Answer 5

1.Income earned at today’s prices isn’t worth as much as the same income in previous years.
2. To make past and present income levels comparable we would have to value them at the same price level.

Question 6

How do you convert nominal values to real values.

Answer 6

Multiply the income value by the ratio of price indices for the two years.

Question 7

Fiscal policies

Answer 7

Any policy based changes in the level of government spending or revenue raising.
Government spending
Taxation
Government borrowing or debt repayment

Question 8

Monetary policies

Answer 8

Any policy based on changing the price or quantity off money in circulation.
Interest rates
The money supply
Exchange rates

Question 9

Supply side policies

Answer 9

Any policy aimed at improving the efficiency or productivity of resources or markets with the objective of increasing total output.