9708 · 4.1
National income statistics flashcards
Revision flashcards for Cambridge 9708 National income statistics (syllabus 4.1). Flip, recall, then mark a real past-paper question.
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What is GDP?
Gross Domestic Product — total market value of all final goods and services produced within a country's borders in a given period.
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What is GNI?
Gross National Income = GDP + net property income from abroad (income earned by residents minus income paid to non-residents).
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Three approaches to measuring GDP?
Expenditure (C + I + G + X − M), income (wages + rent + interest + profit), and output (sum of value added at each production stage).
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Nominal vs real GDP?
Nominal GDP uses current prices; real GDP uses constant (base-year) prices to remove inflation and show actual volume of output.
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Real GDP growth rate formula?
((Real GDP₁ − Real GDP₀) ÷ Real GDP₀) × 100 — measures change in output volume, not price changes.
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Key limitation of GDP as a welfare measure?
GDP ignores distribution, non-market activity, environmental damage, and leisure — higher GDP does not always mean higher living standards.
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What is Gross Domestic Product (GDP)?
The total market value of all final goods and services produced within a country's geographical borders in a specific time period, typically one year.
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How is Gross National Income (GNI) calculated from GDP?
GNI = GDP + Net Property Income from Abroad. This accounts for income earned by residents from overseas assets minus income paid to non-residents for assets held domestically.
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Why is Real GDP considered a more accurate measure of economic growth than Nominal GDP?
Because Real GDP is adjusted for inflation, it measures the actual change in the volume of goods and services produced, whereas Nominal GDP can be distorted by price level changes.
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What is GDP per capita and what is its main purpose?
GDP per capita is the total GDP of a country divided by its population. Its main purpose is to provide a measure of the average income per person, often used for international comparisons of living standards.
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State two significant limitations of using national income statistics to measure living standards.
1. They ignore the distribution of income, so a high per capita figure can mask significant inequality. 2. They exclude non-marketed output, such as unpaid household labour and activity in the informal economy.