Question

QUESTION SEVEN
The following data relates to the economy of a country over a one-year period.

K’B
Subsidies ………………………………………… 1 000
Gross domestic fixed capital formation……………. 2 400
Exports of goods and services ……………………. 2 000
Government final consumption ……………………. 3 000
Property income from abroad …………………… 300
Imports of goods and services ……………………. 2 500
Value of physical decrease in stocks …………… 10
Consumer’s expenditure ……………………. 8 000
Capital consumption/Depreciation ………………… 1 500
Taxes on expenditure……………………………... 1 750
Property income paid abroad ……………………. 500

Required

Calculate the following from the above data:

(a) Gross domestic product at market prices [4 marks]
(b) Gross domestic product at factor cost [4 marks]
(c) Gross national product at factor cost [4 marks]
(d) Net national product at factor cost [3 mark]

Answer 1

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Answer 2

The Gross Domestic Product (GDP) of an economy is a measure of total production. More precisely, it is the monetary value of all goods and services produced within a country or region in a specific time period. While the definition of GDP is straightforward, accurately measuring it is a surprisingly difficult undertaking. And attempts to make comparisons over time and across borders are complicated by price, quality and currency differences. This article covers the basics of GDP data and highlights many of the pitfalls associated with intertemporal and spatial comparisons.

From the long-term perspective of social history, we know that economic prosperity and lasting economic growth is a very recent achievement for humanity. In this section we will look at this more recent time and will also study the inequality between different regions – both in respect to the unequal levels of prosperity today and the unequal economic starting points for leaving the poverty of the pre-growth past.

Economic prosperity is measured as via gross domestic product (GDP) per capita, the value of all goods and services produced by a country in one year divided by the country’s population. Economic growth is the measure of the change of GDP from one year to the next. This entry shows that the current experience of economic growth is an absolute exception in the very long-run perspective of social history.