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Factor Income Approach and Computation of Net Income Quiz

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Factor Income Approach and Computation of Net Income Quiz

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Questions and Answers

What was the percentage increase in prices from 2004 to 2005?

0 percent

16 percent

13 percent

22 percent (correct)

What was the percentage increase in real GDP from 2004 to 2005?

27 percent

22 percent (correct)

7 percent

0 percent

If Philippines GDP exceeds Philippines GNP, what does this indicate?

The Philippines real GDP is more accurate than the Philippines GNP.

Foreigners are producing more in the Philippines than Philippine citizens are producing in foreign countries.

Philippine citizens are producing more in foreign countries than foreigners are producing in the Philippines. (correct)

The Philippines real GDP is higher compared to the Philippines nominal GDP.

Which of the following best describes the relationship between Philippines GDP and GNP?

GDP measures production inside a country while GNP measures production by the country's citizens worldwide. Signup and view all the answers

Which economic concept is a better indicator of a nation's economic performance - real GDP or nominal GDP?

Real GDP, as it accounts for inflation and reflects actual economic growth. Signup and view all the answers

How would an increase in prices affect real GDP?

Increase in prices would lead to a decrease in real GDP. Signup and view all the answers

What does a negative percentage change in real GDP indicate?

Economic recession or contraction. Signup and view all the answers

What is the main difference between Gross Domestic Product (GDP) and Gross National Product (GNP)?

GDP includes only production within the country's borders, while GNP includes production by the country's residents both domestically and abroad. Signup and view all the answers

What does 'final' mean when referring to goods and services in GDP calculation?

Only goods and services that are available for consumption are counted. Signup and view all the answers

In calculating GDP, why is it important to avoid double-counting?

To prevent overestimation of a country's economic output. Signup and view all the answers

Which components make up the income approach to measuring GDP?

Wages, rent, and profit earned in the economy. Signup and view all the answers

How is GDP measured using the factor-income approach?

By adding up all income earned in the economy such as wages, rent, and profit. Signup and view all the answers

What is the significance of 'in a given period' in the definition of GDP?

It ensures that only newly produced goods and services are counted, excluding those produced in previous years. Signup and view all the answers

Why does GDP focus on legally sold goods and services 'within a country'?

To ensure accurate measurement of domestic production without including foreign transactions. Signup and view all the answers