Question

What is national income accounting?

            What is GDP?

                        How is it calculated?

                        What is the difference between real and nominal GDP?

            Labor Force

                        How is it calculated?

                        What does an expanding labor force do to the nations PPF?

                                    What about the production mix?

                        Can it give a distorted view of the employment situation?

Answer 1

1) GDP (GROSS DOMESTIC PRODUCT ) IS THE TOTAL MARKET VALUE OF THE GOODS AND SERVICES PRODUCED IN A COUNTRY WITHIN IN A CERTAIN TIME PERIOD .

GDP IS MOST WIDELY USED MEASURE OF THE SIZE OF NATION ECONOMY .GDP INCLUDES ONLY PURCHASES OF NEWLY PRODUCED GOODS AND SERVICES. TRANSFER PAYMENT MADE BY THE GOVT ( UNEMPLOYMENT ,RETIREMENT,AND WELFARE BENEFITS) ARE NOT ECONOMIC OUTPUT AND ARE NOT INCLUDED IN THE CALCULATION OF GDP.

  I WILL UPLOAD ABOUT GDP

DIFFERENCE BETWEEN REAL GDP AND NOMINAL GDP

NOMINAL GDP IS SIMPLY GDP AS WE HAVE DESCRIBED IT UNDER THE EXPENDITURE APPROACH.THE TOTAL VALUE OF ALL GOODS AND SERVICES PRODUCED BY AN ECONOMY ,VALUED AT CURRENTMARKET PRICES FOR AN ECONOMY WITH N DIFFERENT GOODS AND SERVICES ,WE CAN EXPRESS NOMINAL GDP AS ;

BECAUSE NOMINAL GDP IS BASED ON CURRENT PRICES ,INFLATION WILL INCREASE NOMINAL GDP EVEN IF THE PHYSICAL OUTPUT OF GOODS AND SERVICES REMAINS CONSTANT FROM ONE YEAR TO NEXT.

REAL GDP MEASURES THE OUTPUT OF THE ECONOMY USING PRICES FROM A BASE YEAR REMOVING THE EFFECT OF CHANGES IN PRICES SO THAT INFLATION IS NOT COUNTED AS ECONOMIC GROWTH.

GDP CALCULATION UNDER EXPENDITURE APPROACH

UNDER THE INCOME APPROACH ,

GDP = NATIONAL INCOME + CAPITAL CONSUMPTION ALLOWANCE +STATISTICAL DISCREPANCY

NATIONAL INCOME ACCOUNTING

LABOR FORCE

LABOR FORCE CALCULATION