Economics Prep 3
Complete Paper 1 Essay Question: Q1 A and B page 169
A) Explain three uses of national income statistics
B) Evaluate the use of GDP figures as a means of comparing countries. A) National income (total net value of all goods and services produced within a nation over a specified period of time) statistics have many different uses. It is for example used as a comparison scale between countries. This is a useful information, if for example a country needs help, but the resources of the helping countries are relatively scarce (limited), the country with the lowest national income would be more likely to get the most help from the other countries to get their economy going, built up an infrastructure or to get out of a trough. Another way of using the national income is to make the government know how their economy is going, especially, if their Gross Domestic Product (GDP) (measures the value of output produced within an country over a given amount of time) is rising, which is good, or decreasing. This is important to know for the government and companies, because they can see different things for the statistics, for example an increase in demand or the employment, if it is going to be higher or lower. If there is a higher demand, of course the companies will be more likely to employ people, who will have an increase in their income and are then buying things, what will increase the economy. And on the other hand the statistics can be used to prevent a crisis or even a crash of the economy by reacting quick, by seeing that the national income has decreased The third use is that the national income can be used as a base for analysing the economy over an amount of time. This is done by experts, who are creating models if there will be economic growth or not, how that will influence the business or even the countries. This helps for example people, to know if they are more likely to be employed, so they can make up their living standards from...
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