WAEC Economics 2016 Theory — Question 8

Model answer

(a) Gross Domestic Product (GDP): This is defined as the monetary value of all goods and services produced by an economy in a particular period of time, usually one year. It includes goods and services produced in a geographical location such as Nigeria. It could be measured using Income approach, output approach and expenditure approach. (b) Gross National Product (GNP): This is defined as the monetary value of all goods and services produced by the nationals (citizens) of an economy in a particular period of time, usually one year. It is the summation of the GDP and net income from abroad, i.e. GNP = GDP + FIFA, where FIFA = Net factor income from abroad. (c) Cost of living: This is the amount of goods and services which are required to meet the basic needs of life. It is the cost of maintaining a certain standard of living. (d) Per Capita income: This is the national income per head. It is the measure of standard of living in an economy in a particular period of time, usually one year. Per capita income = National income / population, or GDP / population (e) Standard of living: This is the measure of quality of life of the people in a particular country in a particular period. It is the level of wealth of the people in terms of access to basic needs of life.