National income statistics · AS Level Economics

Which adjustments are needed to change Gross Domestic Product (GDP) at basic prices to GDP at market prices?

indirect subsidies taxes

• Aadd add
• Badd subtract
• Csubtract add
• Dsubtract subtract

Nominal GDP of a country at current market prices was $1000bn in year 1. In year 2, its nominal GDP had risen to $1050bn.

What happened to real GDP if the general price level had increased by 10% over the same period?

• AReal GDP decreased by approximately 5%.
• BReal GDP decreased by approximately 10%.
• CReal GDP increased by approximately 5%.
• DReal GDP increased by approximately 10%.

What is a transfer payment?

• Aadvertising expenses incurred by a charity organisation
• Bfood vouchers to help low-income households pay for food
• Cinterest-free study loans given to deserving students by the government
• Dsalary paid to a nurse working in a hospital that provides free treatment

Why might Gross Domestic Product (GDP) not be a useful measure of economic output?

• AApplication of technology has enabled a smaller size of workforce to achieve greater productivity.
• BDamage to the environment is often unquantified or even ignored.
• CLand reclamation has created more urban space to overcome crowding.
• DShortages in labour supplies have been overcome by international migration of labour.

What adjustment is made to change the value of Gross Domestic Product (GDP) from market prices to basic prices?

• Aadd indirect taxes and add subsidies
• Badd indirect taxes and deduct subsidies
• Cdeduct indirect taxes and add subsidies
• Ddeduct indirect taxes and deduct subsidies

What is not included in the measurement of national income?

• Abenefits paid to the unemployed
• Bdividends paid to shareholders
• Cprofits retained by companies
• Drent paid to landlords

GDP of a country measured at current market prices was $1000bn in year 1. This had risen to $1100bn in year 2.

Over the same period the general price level had risen by 5%.

What has happened to real GDP?

• AReal GDP fell by approximately 5%.
• BReal GDP fell by approximately 10%.
• CReal GDP rose by approximately 5%.
• DReal GDP rose by approximately 10%.

Under which conditions will real Gross Domestic Product (GDP) grow the fastest?

rate of change in rate of change in nominal GDP general price level (% per year) (% per year)

• A0 −2
• B0 +2
• C+2 −2
• D+2 +2

When calculating national income by the income method, what would not be included?

• Aincome from abroad
• Bprofits of private sector businesses
• Crent from the ownership of land
• Dtransfer payments

What is an example of a transfer payment?

• Aa household moving savings from one bank account to another
• Ba monthly repayment on a loan used to buy a new cooker
• Cthe amount paid to transport goods from one city to another
• Dgrants paid to students by the government

Which statement correctly describes an increase in real GDP?

• ANominal GDP rising faster than nominal income.
• BNominal GDP rising faster than the rate of inflation.
• CThe rate of inflation rising faster than aggregate demand.
• DThe rate of inflation rising faster than nominal income.

Which source of income is not included in measuring real GDP?

• Apension paid to retired people
• Bprofits made by firms
• Crent paid to landlords
• Dwages paid to nurses

nominal GDP  price index in base year 15 What can be calculated using the formula ? price index in current year

• Agross national income
• Breal gross domestic product
• Cnet domestic income
• Dnet domestic product

The money income of a country rises by 10% whereas its population falls by 10% during a year.

What is likely to happen to the national income per head?

• AIt will remain unchanged.
• BIt will rise by exactly 20%.
• CIt will rise by less than 20%.
• DIt will rise by more than 20%.

Explain why economic growth is usually measured using real GDP rather than nominal GDP and consider the extent to which an economy can only achieve economic growth by an increase in the quantity of its resources. [8]

Explain one reason why the IMF uses percentage change in real GDP and not percentage change in nominal GDP when measuring economic growth. [2]

Explain two causes of economic growth and consider the extent to which their impact can be measured. [8]

Explain what is meant by ‘real GDP’. [2]