Question

The following statistics is provided by Statistics department for 2017. All figures are in million cedis

Expenditure Amount ($Million)

Durable goods 850

Non durable goods 2,000

Service 4,500

Non-residential Investment 1,200

Residential Investment 500

Change in business inventories 30

Government expenditure 1920

Export 1050

Import 1,450

Required:

(a) Calculate the GDP of the Country using expenditure approach

(b) Discuss the three advantages and disadvantages of the method used in (a) above

(c) Explain five (5) importance of National Income Statistics

Answer 1

Answer)

B) Advantages of Expenditure Approach

1. It is easy to understand and easy to compute and universally can be used to correlate figures with other nations.

2. It does help the economist and the other persons interested in formulating a general direction in which an economy may be going.

3. The expenditure approach calculates the amount of money used in an economy to make purchases, and therefore to infer the national income in terms of goods generated and money paid purchasing those good.

Limitations/Disadvantages

1. It forgoes the black economy.

2. It is argued in the community about the quality and accuracy of the data compiled and the technique used to compile such data.

3. It does not report for those transactions which do not involve monetary.

Advantages of national income statistics:-

1. The rate of economic growth- hepls to assess the performance of an economy.

2.Economic Planning - Helps to make planning.

3.Changes to the distribution of income - Helps to assess the real income.

4.Economic Policies - Helps in formulating policies.

5. Budgetary Policies - Helps to make policies for the government.

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