9708 · 4.1

National income statistics — practice questions

Practice and worked examples for 9708 National income statistics. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Country Z's nominal GDP was $500 billion in 2023 and $540 billion in 2024. The GDP deflator rose from 125 to 135.

(a) Calculate the nominal GDP growth rate. (b) Calculate real GDP in 2024 (using 2023 as the base). (c) Calculate the real GDP growth rate.

Show solution outline

(a) Nominal growth rate = ((540 − 500) ÷ 500) × 100 = 8.0%

(b) Real GDP 2024 (2023 base) Real GDP = (Nominal GDP ÷ Deflator) × 100 2023 real GDP = (500 ÷ 125) × 100 = ** $400 bn**$ 2024 real GDP = (540 ÷ 135) × 100 = ** $400 bn**$

Despite 8% nominal growth, all of the increase was inflation — real output was unchanged.

Worked example 2

The following data is for the fictional country of Econland in 2025:

Consumer spending (C): $600 billion
Gross investment (I): $200 billion
Government spending (G): $250 billion
Exports (X): $150 billion
Imports (M): $180 billion
Net Property Income from Abroad (NPIA): -$20 billion
Population: 25 million

Calculate: (a) Gross Domestic Product (GDP) (b) Gross National Income (GNI) (c) GDP per capita

Show solution outline

(a) Gross Domestic Product (GDP) Using the expenditure approach: GDP = C + I + G + (X - M) GDP = $600bn +$ 200bn + $250bn + ($ 150bn - $180bn)$ GDP = $1050bn + (-$ 30bn) GDP = $1020 billion

(b) Gross National Income (GNI) Using the formula GNI = GDP + NPIA: GNI = $1020bn + (-$ 20bn) GNI = $1000 billion GNI is lower than GDP because there is a net outflow of income to foreign countries (e.g., profits repatriated by foreign firms).

(c) GDP per capita Using the formula GDP per capita = Total GDP / Population: GDP per capita = $1,020,000,000,000 / 25,000,000$ **GDP per capita = $40,800**$

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