St. Lawrence College

School of Business

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

ECON-2

 

Assignment 1

 

1)     
 

2)     
GDP only
includes the final goods- That goods which are ready to sale in the market.
However, the raw goods which are used to make the final goods are not included
because it doesn’t count in any counting of selling. While, that doesn’t mean
that raw good are won’t be counted in any way it just means that intermediate
good just a part of the supply chain which helps to sell the final product in
the market. For instance, a raw chicken breast sold to a costumer at a Walmart is
part of GDP, but the raw chicken in the restaurant isn’t. This is just to avoid
double counting.

3)     
To measure
Income based GDP is calculated by adding all the incomes from the production
factors Such as, labour and capital plus taxes subtract subsidies to obtain a
comparable expenditure-based GDP.

 

 

Estimates

Millions of dollars

Compensation of employees

950,000

(+) Gross operating surplus

600,000

(+) Mixed income

105,000

(+) Taxes Less subsidies on production

65,000

(+) Statistical discrepancy

120,000

Equals: Gross domestic product ta market prices

1,840,000

 

As well as, to measure expenditure based GDP is planned by adding the
six sectors of the economy :- households, non-profit organizations, financial
corporations, governments and non-residents to calculate GDP in the expenditure
approach in a effective ways.

 

Estimates

Millions of dollars

Final consumption
expenditure

14,00,000

(+) Gross fixed capital formation

425,500

(+) Investment in inventories

2,500

(+) Exports of goods and services

640,000

(-) Imports of goods and services

560,600

Equals: Gross domestic product ta market prices

1,907,400

4)     
Difference
between real and nominal values is that the real values are adjusted for
inflation, while nominal values are not. As a result, nominal GDP will often
appear higher than real GDP.

Nominal
values of GDP from different time periods can differ due to changes in
quantities of products and changes in price level. As a result, taking price
levels or inflation into account is compulsory when determining if we are
really better or worst when making comparisons between different time periods.
However, values for GDP are adjusted for differences in price levels, whereas
figures for nominal GDP are not as compare to nominal.