Eco211 objective

Total market value of ALL FINAL GOODS & SERVICE produce by RESIDENT of a country during given PERIOD is…

GNP

Diff between GDP & GNP

Net property income from abroad

Main factor that differentiates GNP from (NI/NNP)

Capital consumption

The problem of double counting in measuring GDP can be avoided by

Including the value of FINAL GOOD & excluding value of INTERMEDIATE GOOD

Improvement in standard of living is best indicated by an INCREASE in?

REAL INCOME per CAPITA

-measures the purchasing power of income AFTER ADJUSTING for INFLATION

Increases in REAL INCOME PER CAPITA = average individual can afford > goods & services

Sum of MV of FINAL PRODUCT produced in the NATION

Total value of goods & sevice produce within a country

It includes value of FINAL GOOD & SERVICE to AVOID DOUBLE COUNTING

Largest component of GDP is

PERSONAL CONSUMPTION EXPENDITURE

If Net factor income from abroad is POSITIVE

GNP > GDP

income earned by its residents from abroad exceeds the income earned by foreign residents in the country, causing the Gross National Product (GNP) to be greater than Gross Domestic Product (GDP).

The circular flow of income for two-sector economy

Consumers spend money on consumption goods, thus paying to the producers

producers pay to factors of production for their services, thus generating income

Gross Domestic Product (GDP) does not include

Foreign-produced goods

1. GDP measures the market value of goods and services produced within a country, excluding foreign-produced goods, even if they are sold within the domestic economy.

Net export is a negative value when

IMPORT > EXPORT

When there's an inflation

GDP increases faster than REAL GDP

-inflation increase NOMINAL GDP (hadn't been adjusted for inflation) faster than real GDP (has adjusted for inflation)

Use if national income data EXCEPT

-avoid problem of double counting

NI data is to determine

1. Distribution

2. Measure economic growth assist in gov planning

GDP that is measured using CURRENT PRICE

NOMINAL GDP

The concept of Value Added solves the double counting problem in calc of NI by using

PRODUCT APPROACH

• CALC VALUE ADDED at EACH STAGE of production, helping yo avoid double counting by only considering VALUE added to EACH PRODUCT

GDP that is measured in terms of PRICE OF BASE YEAR

REAL GDP

Total valuebof income earned by Malaysian is equal to

GNPfc