Topic 1 - National Accounting

Question 1

What is the GNP?

Answer 1

A market value of the production of final goods and services rendered by a country’s citizens in its economy (1-year interval). The location does NOT matter

Question 2

Does GNP increase or decrease over time? Why?

Answer 2

Increase, because 1) The production of most goods increases over time and 2) The prices of most goods also increase over time

Question 3

What is Real GNP?

Answer 3

The same as GNP, but using prices of a base year to compare

Question 4

What is GDP?

Answer 4

The market value of the production of final goods and services carried out in an economy in 1 year.
The location MUST be in the country (unlike GNP, where it can be anywhere)

Question 5

What is the equation for the nominal GDP?

Answer 5

It is the sum of the quantities of final goods times their current price

Question 6

GDP formula?

Answer 6

GDP = C + I + G + NX

Question 7

GDP in the short term?

Answer 7

Depends on the components of demand (higher/lower prices, good/bad discoveries, etc)

Question 8

GDP in the long run?

Answer 8

Depends on components of supply (new tech, labor, capital)