GDP Q's
Gross Domestic Product (GDP) (Text p. 400 Q’s 1 & 2)
1. Define GDP and distinguish between a final good and an intermediate good. Provide examples.
Gross Domestic product, is the market value of the final goods and services produced within a given time period.
A final good is an item that is bought by its final user during a specified time period. It contrasts with an intermediate good, which is an item that is produced by one firm, bought by another firm and used as a component of a final good or service.
2. Why does GDP equal aggregate income and also equal aggregate expenditure?
Aggregate expenditure equals consumption expenditure plus investment plus government expenditure plus net exports. Whereas, Aggregate income is equal to the total amount paid for the services of the factors of production used to produce final goods and services. When firms pay out, incomes they receive from the sale of the output, aggregate income equals aggregate expenditure because the two methods of measuring GDP give the same answer.
Measuring Australia’s GDP (Text p. 403 Q’s 4 & 5)
1. What is the distinction between nominal GDP and real GDP?
Nominal GDP is the value of final goods and services produced in a given year when valued at the prices of that year.
Real GDP is the value of final goods and services in a given year when valued at the prices of a reference base year so therefore Nominal GDP is just a more precise name for GDP.
2. Real GDP is the value of final goods and services in a given year when valued at the prices of a reference base year. By comparing the value of production in the two years at the same prices, we reveal change in production.
Uses and limitations of GDP (Text p. 409, Q 5. & p. 420 Q 32)
1. Explain why real GDP might be an unreliable indicator of the standard of living.
The real GDP might be an unreliable indicator of the standard of living because it takes into account some of the factors that influence the standard of
1. Define GDP and distinguish between a final good and an intermediate good. Provide examples.
Gross Domestic product, is the market value of the final goods and services produced within a given time period.
A final good is an item that is bought by its final user during a specified time period. It contrasts with an intermediate good, which is an item that is produced by one firm, bought by another firm and used as a component of a final good or service.
2. Why does GDP equal aggregate income and also equal aggregate expenditure?
Aggregate expenditure equals consumption expenditure plus investment plus government expenditure plus net exports. Whereas, Aggregate income is equal to the total amount paid for the services of the factors of production used to produce final goods and services. When firms pay out, incomes they receive from the sale of the output, aggregate income equals aggregate expenditure because the two methods of measuring GDP give the same answer.
Measuring Australia’s GDP (Text p. 403 Q’s 4 & 5)
1. What is the distinction between nominal GDP and real GDP?
Nominal GDP is the value of final goods and services produced in a given year when valued at the prices of that year.
Real GDP is the value of final goods and services in a given year when valued at the prices of a reference base year so therefore Nominal GDP is just a more precise name for GDP.
2. Real GDP is the value of final goods and services in a given year when valued at the prices of a reference base year. By comparing the value of production in the two years at the same prices, we reveal change in production.
Uses and limitations of GDP (Text p. 409, Q 5. & p. 420 Q 32)
1. Explain why real GDP might be an unreliable indicator of the standard of living.
The real GDP might be an unreliable indicator of the standard of living because it takes into account some of the factors that influence the standard of