The national income and the GDP

International Comparison: By converting the local GNP figures into a common unit (usually in US$), the economists can compare the standard of living of different nations.  It helps to show the rate of growth or development of different nations.

It used by businesses to make forecasts about future demand. This enables wide range of products. It will also make it easier for the businesses to compete overseas and entering new markets for wider customer bases.  This will help economists decide whether the government is or isn’t being able to achieve its macroeconomic objective of balance of payment.

b)

        The Gross Domestic Product measures the value of economic activity within a country.  The GDP figures are usually in US dollars ($).GDP is defined as the market value of all final goods and services produced domestically in a single year and is the single most important measure of macroeconomic performance. A related measure of the economy's total output product is gross national product (GNP), which is the market value of all final goods and services produced by a nation in a single year.

        The GDP is used to compare different countries and to measure the economic growth of an economy. There are two ways of measuring GDP, the expenditure approach and the income approach. The expenditure approach is to add up the market value of all domestic expenditures made on final goods and services in a single year. Final goods and services are goods and services that have been purchased for final use or goods and services that will not be resold or used in production within the year. Intermediate goods and services, which are used in the production of final goods and services, are not included in the expenditure approach to GDP because expenditures on intermediate goods and services are included in the market value of expenditures made on final goods and services. Including expenditures on both intermediate and final goods and services would lead to double counting and an exaggeration of the true market value of GDP.