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3 marksNational Income Accounting

CAPE Economics Unit 2 · 2014 · Paper 2 · Question 1(c)(ii)a)

The following information is given for the Oilandia economy: Wages and salaries = 800, Consumption expenditure = 600, Taxes = 250, Transfer payments = 50, Profits = 200, Investment = 150, Government spending = 200, Exports = 300, Imports = 275, Rents = 75 (values in $ Millions).

Explain the income approach for calculating GDP.

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Other parts of this question

  1. 1(a)Define the term 'intermediate good'.[2 marks]
  2. 1(b)(i)Explain why intermediate goods are NOT counted in the calculation of GDP.[2 marks]
  3. 1(b)(ii)Define the term 'value added'.[2 marks]
  4. 1(c)(i)a)State the formula for calculating gross domestic product (GDP) using the expenditure approach.[2 marks]
  5. 1(c)(i)b)Calculate the GDP for Oilandia, using the expenditure approach.[2 marks]
  6. 1(c)(ii)b)Calculate the GDP for Oilandia using the income approach.[3 marks]
  7. 1(d)Describe THREE types of 'leakages' from the circular flow of an economy.[9 marks]

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