National income. GDP
The Assessment Task
Your assessment task is to investigate the issues surrounding the brief you have been given and to present your findings in a written report.
National Income Accounting is the methodology used in measuring the total output and income of the economy. The Gross Domestic Product (GDP) is the value of all the final goods and services produced in the domestic economy in a given year. Certain words in this definition were italicized to give emphasis to key components of how the GDP is measured. Since the GDP measures the value of the goods and services produced it is important to note that the GDP is measured in monetary units, NOT in units of output. Measuring the GDP in monetary units allows us to aggregate or add up the output across very diverse types of goods and services.
This coursework assignment will contribute to your understanding regarding the Aggregate Demand and the way changes in aggregate demand affect the National Income. There are two different ways to actually calculate the GDP. The GDP can be determined either by adding up all that is spent to buy this year’s output (the expenditures approach) or by summing up all the incomes derived from the production of this year’s output (the income approach).
You are required to produce a 2000-word economic report to calculate the GDP in a country of your choice by using the Expenditures Approach for 2000 and 2016 and by further explain the differences in all variables included. Furthermore, you have to critically evaluate whether GDP is a Good Measure of Economic Output and Welfare for a country.
You have to consider that the National Income Accounting Identity is:
Y = C + I + G + NX
Where Y is the GDP (the total output or income of the economy); C is consumption expenditures (the total payment made by households on consumption goods and services); I is investment expenditures (the purchase of new plants, equipment, buildings, new homes, and additions to inventories); G is government expenditures (Government purchases of finished products of businesses and all direct purchases of resources); NX is net exports (exports minus imports).