18 Questions
What is the purpose of selecting a reference base year in GDP calculation?
To compare the prices of goods and services across different years
What is the difference between real GDP and nominal GDP?
Real GDP is the value of goods and services produced in a given year, expressed in terms of the prices of that same year, while nominal GDP is the value of goods and services produced in a given year, expressed in terms of the prices of the base year
Why are real GDP and nominal GDP the same in the base year?
Because the base year and the current year are the same thing
What is the formula used to calculate GDP using the expenditure approach?
Y = C + I + G + NX
What is the reason for calculating real GDP?
To identify the changes in GDP over time that are due to greater production
What is the purpose of multiplying the quantities of goods and services by the prices of the base year?
To calculate real GDP
What is the formula to calculate GDP using the Expenditure Approach?
Y = C + I + G + NX
What does a negative Net exports (NX) value indicate?
A trade deficit
What is the key difference between the Income Approach and the Expenditure Approach?
The Income Approach calculates GDP at factor prices, while the Expenditure Approach calculates GDP at market prices.
What is the percentage of GDP accounted for by Consumption expenditure?
71.1%
What is the name of the approach that calculates GDP by adding up the incomes earned by households for their services?
Income Approach
What is the term for GDP calculated using the Expenditure Approach?
Gross Domestic Product (GDP)
According to the income approach and expenditure approach, what should be ideally equal?
Total income and total expenditure
What does a large statistical discrepancy between the income approach and expenditure approach indicate?
Low accuracy of GDP estimates
What is the main difference between GDP and GNP?
GDP is the market value of final goods and services produced within a country, while GNP is the market value of final goods and services produced by residents of a country
Why do incomes tend to be reported accurately, while expenditures are estimated?
Incomes are reported to SARS or similar organizations, while expenditures are not
What is the purpose of looking at the statistical discrepancy?
To compare the accuracy of the income approach and expenditure approach
What is the sum of incomes typically compared to in the expenditure approach?
Sum of expenditures
Calculate the Gross Domestic Product (GDP) using the expenditure approach. Learn how to add up consumption, investment, government expenditure, and net exports to get the GDP. Understand the concept of trade deficit and its impact on the economy.
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