Reference no: EM133079426
The table below gives the values of different expenditures in a particular nation during 2021.
|
Item
|
Dollars (Billions)
|
|
Consumption expenditure.
|
2,814
|
|
Investment.
|
|
|
Government purchases of goods and services.
|
1,899
|
|
Exports of goods and services.
|
900
|
|
Imports of goods and services.
|
876
|
|
Nominal GDP
|
7,349
|
Required
(i) What was the value of net exports of goods and services in 2021?
(ii) What was the level of investment equal to in 2020?
b) The table below presents the production and prices in a very small economy during a pandemic. Use 2020 as the base period.
|
|
2020
|
2021
|
|
Item
|
Quantity
|
Price
|
Quantity
|
Price
|
|
Domestic Pets Adopted
|
220,000
|
$120
|
480,000
|
$140
|
|
Gym Equipment
|
50,000
|
$1,300
|
400,000
|
$1,200
|
|
Airfares
|
3,329,000
|
$280
|
194,290
|
$300
|
(iii) What are the nominal and the real GDP equal to in 2020?
(iv) What are the nominal and the real GDP equal to in 2021?
(i) Explain the disadvantage of measuring GDP in nominal terms rather than real terms, when studying movement in a nation's GDP over time.
c) In-country B the GDP per capita is $20,000 per person, but most of the population is starving. Yet in country C, the GDP per capita is $3,000 per person but the population is happy and well-fed.
Required
With reference to the above example, identify and explain at least three weaknesses in the use of GDP as a measure of national welfare.