Indian Economy · Topic 6 of 20
Measuring the size of an economy's output and income
The Basics
Inventory is the stock of unsold goods a firm holds. It is measured on one date, so it is a stock. A change in inventory during a year is a flow. This flow is counted as part of investment.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
National income is the total value a country produces in a year.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
The Value Added Method is also called the Product Method. It finds total output by adding value added at each stage of production.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
The expenditure method adds up all spending to find Gross Domestic Product (GDP).
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Income Method adds up incomes earned in production.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Goods and services have a value. We can state this value in different ways.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Gross Domestic Product (GDP) measures the value of all final goods and services. These are made inside a country in one year.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Gross Domestic Product can be measured two ways. One way uses this year's prices. We call this nominal Gross Domestic Product. The other way uses prices from a fixed past year. We call this real Gross Domestic Product. The fixed past year is called the base year. The only difference between them is inflation. Inflation means prices keep rising over a long time. For example, milk may cost more each year than before.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Gross Domestic Product means total value of goods and services made in a country.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Per capita income is income per person in a country.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
A base year is a fixed year used to compare prices over time. It helps measure real growth, without price-rise effects.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Gross Domestic Product (GDP) measures the total value of goods and services a country makes.
Sign up free for the full concept, practice MCQs and PYQs