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6 marksNational Income Accounting

CAPE Economics Unit 2 · 2007 · Paper 2 · Question 1(a)

Question 1 examines national income accounting, GDP definitions, alternative measurement approaches, and measures of economic well-being.

Explain the difference between Gross Domestic Product (GDP) and Gross National Product (GNP).

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Other parts of this question

  1. 1(b)(i)Explain why purely financial transactions are not counted in GDP calculations.[2 marks]
  2. 1(b)(ii)Explain why second-hand sales are not counted in GDP calculations.[2 marks]
  3. 1(c)Outline the main difference between the expenditure approach and the income approach to the determination of GDP.[12 marks]
  4. 1(d)(i)Briefly describe how Net Domestic Product is calculated.[2 marks]
  5. 1(d)(ii)Briefly describe how National Income is calculated.[2 marks]
  6. 1(d)(iii)Briefly describe how Personal Income is calculated.[2 marks]
  7. 1(d)(iv)Briefly describe how Disposable Income is calculated.[2 marks]
  8. 1(e)Define the term 'Consumer Price Index'.[3 marks]
  9. 1(f)Explain what is meant by the GDP deflator.[3 marks]
  10. 1(g)Discuss four reasons why GDP is not always a true measure of the well-being of an economy.[14 marks]

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