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Chapter 7: Q1. (page 151)

In what ways are national income statistics useful?

Short Answer

Expert verified

National income statistics help in measuring the economic performance of a nation, and therefore, is a useful statistic.

Step by step solution

01

Meaning of national income statistics

The national income statistics measure the aggregate output production in the country.Gross Domestic Product (GDP) is one of the ways of measuring national income where the dollar value of the output produced within the domestic territory is calculated during a period of time.

The national income of the US is calculated by an agency of the US Commerce Department, called the Bureau of Economic Analysis (BEA). For example, the GDP of the US was $20.93 trillion in 2020.

02

Importance of national income statistics

The national income helps the policymakers in the following ways:

  • Evaluating the health of the economy by calculating the production levels.

  • Estimating the employment generation capacity of the economy.

  • Estimating the Long-run growth.

  • Understanding how economic policies should be altered to improve the economic state of the country.

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Most popular questions from this chapter

Provide three examples of each: consumer durable goods, consumer non-durable goods, and services.

The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data.

Tina walks into Ted’s sporting goods store and buys a punching bag for \(100. That \)100 payment counts as ______________ for Tina and _____________ for Ted.

a. income; expenditure

b. value added; multiple counting

c. expenditure; income

d. rents; profits

Contrast nominal GDP and real GDP. Why is one more reliable than the other for comparing changes in the standard of living over a series of years? What is the GDP price index, and what is its role in differentiating nominal GDP and real GDP?

Which of the following goods are usually intermediate goods and which are usually final goods: running shoes, cotton fibers, watches, textbooks, coal, sunscreen lotion, lumber?
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