National income and output interpretation

Question 1

What is a black economy ?

Answer 1

Part of an economy which is hidden/ not measured, this could be for example gardening or housework

Question 2

How much of the economy is made up of the black economy?

Answer 2

12%

Question 3

What is leisure time?

Answer 3

The time people spend not at work and improving there economic welfare

Question 4

Why can GDP be a bad measure?

Answer 4

Because it does not show national welfare as it may not show inequality levels

Question 5

How can GDP levels be unreliable?

Answer 5

Different countries use different accounting systems, The size of GDP increase varies with the size of the country, Finally measuring GDP will be relative to local currency, You need to convert the exchange rate to work out purchasing power parity (PPP)

Question 6

What is the Aggregate Demand (AD) Formula

Answer 6

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

Question 7

What is economic welfare?

Answer 7

Economic welfare is defined as the welfare gained from the consumption and production of goods and services

Question 8

What is Gross National Income?

Answer 8

GNI is the income from all workers in an economy+ what businesses earn, and less subsidies and after tax

Question 9

How do you calculate the change in GDP?

Answer 9

• ∆GDP/GDP(t-1) = ∆C/GDP(t-1) + ∆I/GDP(t-1) +∆G/GDP(t-1) +∆X/GDP(t-1) -∆IM/GDP(t-1)