Explain the difference between a country’s ‘Gross National Product’ and ‘National Income’ statistics.
GDP is the total money value of all output produced within a country over a year. National Income figures includes (GDP + income from nationals abroad) – Depreciation. Therefore net National product/NI adds overseas earnings to earnings from local production. Depreciation is subtracted to give final National Income figures.
What is the standard of living?
The standard of living a country is determined by level of goods and services available, ownership of capital equipment and access to modern technology.
Outline two methods that can be used to achieve economic growth.
Economic growth is the expansion of national income. Two methods to increase the productivity of industrial and commercial activities include: a training of human resources and the introduction of technology.
Differentiate between the balance of trade and the balance of payments
The balance of trade is the difference between earnings from exports and payments for imports. The balance of payments is a summation of the balance of trade, net invisible earnings and capital flows.
The balance of payments always balances. Explain this statement.
The balance of payments account is governed by accounting principles. For every debit entry there is a corresponding credit entry. Outflows are matched by inflows. The summation of the current and capital account is zero.
State three measures used to correct balance of payments problems.
Balance of payment problems may be corrected by tariffs, quotas and export incentives to encourage local production for export.
Explain the term ‘per capita GNP.’
Per Capita GNP is the value of a country’s output from local production divided by its population. Per capita GNP figures give an idea of the average income enjoyed by each individual in a country.
Distinguish between visible and invisible trade.
Visible trade is the export and import of physical goods and services for example, sugar, coffee and bauxite. Invisible trade refers to the trade of services for example, tourism and shipping.
Explain two reasons why countries engage in international trade.
Countries engage in international trade to obtain goods that they lack the necessary raw materials to produce.
Countries also engage in trade to obtain goods for which they do not have a comparative advantage.
Differentiate between ‘economic growth’ and ‘economic development.’
Economic growth refers to an increase in national income and economic development is sustained growth that is accompanied by policies established to ensure continuous growth. These include an increase in exportation, decrease in importation, lesser dependence on foreign aid and important infrastructural development.