# Econ reminder

Just nailed a 1/6 on an econ qbank vignette dealing w/ all this crap…couldn’t remember how to calc any of it: Gross Domestic Product (GDP) is the total market value of all final goods and services produced in a country over a stated period. Financial transactions and transfers of income are not included. GDP only counts those goods and services produced within the geographic boundaries of the country. Gross National Income (GNI) is a measure of the total goods and services produced by the citizens of a country. It differs from GDP in that it includes the incomes earned by all of the residents of the country, regardless of where the assets are located. Net National Income (NNI) is equal to GNI less depreciation. In practice, depreciation is difficult to measure by actual usage. Therefore, it is measured by various accounting conventions. Estimates of depreciation may vary greatly from the actual usage of the asset. GDP + net property income from abroad = GNI GNI - depreciation = NNI

add gdp at factor cost which equals GDP - invol tax + subsidies

Thanks for posting, I forgot about NNI. What does market or factor prices mean? I see the formula in the quicksheet, but it helps if you understand what you’re doing.

I just got hit on one that involved calculating exchange rates based on market approach… can somebody summarize that? thanks

I need to look up the factor/market thing b/c I don’t remember at all…

it’s the kind of problems where they tell you that the govt has changed interest rates and effect should take place totally in 2 years then they ask you to recalculate the spot rate

Ok, so the expenditure method of GDP=consumption+investment+exports of goods & services-imports of goods and services. The issue is that expenditures are calculated at market prices, while the output (=value of production-cost of inputs) & income (wages plus a few other incomes and profits) methods are stated at factor prices. Reporting either way is ok, but to get from one to the other the formula is: GDP @ market prices -indirect taxes +subsidies =GDP at factor price Probably not necessary to know all these formulas since it’s just 3 pages in Schweser, but good to know what’s going on behind the scenes.

florinpop Wrote: ------------------------------------------------------- > I just got hit on one that involved calculating > exchange rates based on market approach… can > somebody summarize that? thanks E (S1) = So x (1-change in supply/1) I was totally thrown by this question as well.

maile has got it…

maile, I’ve never seen that formula before! where is that from?