1. Describe the four broad categories of GDP using consumption approach. Give detailed account of each component.
2. Explain the difference between GDP and GNP. What adjustments needs to be made to GDP to arrive at GNP?
3. What is the "Natural Rate of Unemployment" ?
4. Why do some economies grow faster than others?
1. GDP = consumption + gross investment + government spending + net exports
Consumption: all final goods and services used by consumers and businesses
Gross investment: tangible and intangible final goods which are produced by businesses for use in future production. This includes such things as factories and on the job training.
Government spending: this includes all goods used in governmental offices as well as the wages paid to government employees.
Net exports: The sum of the value of the goods a nation exports minus the value of the goods it imports. If it imports more than it exports, this value will be negative.
Gross national product (GDP) is the total economic output produced within a given area, usually a nation. It is generally calculated by taking the ...
GDP, GNP, natural rate of unemployment, and differing rates of economic growth are discussed.