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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

What is the difference between gross private domestic investment and net private domestic investment? If you were to determine net domestic product (NDP) through the expenditures approach, which of these two measures of investment spending would be appropriate? Explain.

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.

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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?

Suppose that California imposes a sales tax of 10 percent on all goods and services. A Californian named Ralph then goes into a home improvement store in the state capital of Sacramento and buys a leaf blower that is priced at \(200. With the 10 percent sales tax, his total comes to \)220. How much of the \(220 paid by Ralph is in the national income and product accounts as private income (employee compensation, rents, interest, proprietor鈥檚 income, and corporate profits)?

a. \)220

b. \(200

c. \)180

d. none of the above
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