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Question 1

Definition of GDP

Answer 1

MARKET VALUE of GOODS & SERVICES produced in an economy during a year

Question 2

What provides the value for the AMOUNT of GOODS & SERVICES

less

the cost of all inputs and raw materials used in the production process

Answer 2

GVA (Gross Value Added) or GDP

Question 3

Value added means…

Answer 3

the added value method is used to calculate GDP

Question 4

Name 7 aspects that must be noted when CALCULATING GVA

Answer 4

1) Total value
2) Final goods & services are included in
determining total production
3) Double counting
4) Goods & services produced WITHIN THE
BOUNDARIES OF A COUNTRY
5) Goods & services produced within A
SPECIFIC PERIOD
6) GROSS: no provision has been made for
depreciation
7) SA Reserve bank uses the QUARTERLY
GDP to determine the short-term
progress of the economy

Question 5

Explain:

TOTAL VALUE

Answer 5

Total value = measures the total PRODUCTION that must be added to the value of production

Question 6

Explain:

DOUBLE COUNTING

Answer 6

Counting the contribution of a FACTOR of production more than once
(example: the value of a car includes the value of its tyres)

Question 7

Name the different ways to avoid DOUBLE COUNTING

Answer 7

1) Count only the value added
2) Count the value of sales when a product
or service reaches the final destination
3) Count only the income earned during
stages of the production

Question 8

What does GROSS NATIONAL EXPENDITURE (GNE) measure?

Answer 8

TOTAL SPENDING on final goods & services

Question 9

What are the 4 x MAJOR sectors?

Answer 9

Households
Businesses
Government
Foreign sector

Question 10

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

Answer 10

C = final CONSUMPTION expenditure
G = GOVERNMENT consumption
expenditure
I = gross fixed capital and the change in
INVENTORIES
X = EXPORTS (goods & services)
M = IMPORTS (goods & services)