Quiz 7: Measuring Domestic Output and National Income
The GDP of the given country is calculated as below: GDP is the sum of market value of all items that are produced in the economy. For instance, GDP of year 1is the sum of all market value of ice cream, shampoo and peanut butter. The sum is $21. The market value of a produce in a year is the price multiplied by the quantity produced in that year. Similarly, GDP in year 2 is $30.
National income statistics are very useful and it helps economists and policymakers to: 1. Assess the health of economy by comparing levels of production at regular intervals. 2. Track the long-run course of the economy to see whether it has grown, been constant or declined. 3. Formulate policies that will safeguard and improve the economy's health.
GDP of that year is calculated as follows: The GDP of that year is $85. The transaction of stocks and bonds, the sale of used car are excluded because they do not create any new production.