National Income Questions

Section A 

Question 1

1. One method of calculating national income is the output method, state two others

2. Explain the term hidden economies, using examples

3. State two economic and two social impacts of hidden economy 

4. Define the terms GDP, GNP and GNI

GDP

GNP

GNI

5. In Ireland, is GDP greater to or less than GNI

Section B

Question 1

1. Draw a detailed circular flow of income in an open economy with both a financial sector and government, showing all leakages and injections. 

2. Outline the impact if leakages exceed injections in the circular flow of income. 

3. The main components of national income (state the equation)

4. Briefly explain three factors that determine/influence consumption (as an element of aggregate demand / national income)

5. Briefly explain three uses of national income statistics 

D. Briefly explain two limitations of national income statistics 

Question 2

1. Explain what is meant by the multiplier 

2. Define the term marginal propensity to save

3. It has been estimated that MPM is 0.2, MPT is 0.1 and MPC is 0.9. Calculate the size of the multiplier. 

Workings:

Multiplier:

4. Calculate the level of national income if there was an injection of 500 million euro 

Workings:

Answer:

5. Briefly explain Ireland’s performance over the last 12 months in relation to National income. (Use statistics to support your answer).