Paper 3 SAQs (macroeconomics)
*Condensed for revision purpose
*The questions included are based on pure economic knowledge
2.1 the level of overall economic activity
N18/3/ECONO/HP3/ENG/TZ0/XX/M
State the four factor payments which constitute the income flow in the circular flow or income model. [2]
● Wages, rent, interest, profit
Define the term leakages. [2]
● A leakage represents the portion of national income which is not spent on domestic output/domestic
consumption
N15/3/ECONO/HP3/ENG/TZ0/XX/M
State the reason why a country's gross domestic product (GDP) may be greater than its gross national
income (GNI). [1]
● Factor income paid abroad exceeds factor income earned abroad
N14/3/ECONO/HP3/ENG/TZ0/XX/M
Explain the differences between GDP, green GDP & GNI. [4]
● The difference between GDP and GNI is that GDP is a measure of the value of output produced within the
boundaries of an economy independently of the nationality of the factors of production involved
whereas GNI is a measure of incomes received by the residents of a country independently of the
geographic location of the factors of production involved
● Green GDP focuses on the environmental cost of production by subtracting the costs of environmental
degradation from GDP
Outline the difference between nominal GDP & real GDP. [2]
● The real GDP adjusts nominal GDP for changes in the average price level (i.e. inflation)
M14/3/ECONO/HP3/ENG/TZ0/XX/M
Outline the difference between the expenditure approach & the income approach. [2]
● In the expenditure approach, total spending on domestic output is summed, whereas in the income
approach, incomes earned in the production of domestic output are summed
Outline the meaning of the term "green GDP". [2]
● Green GDP is GDP adjusted for the effects of production on the environment
N13/3/ECONO/HP3/ENG/TZ0/XX/M
Define the term expenditure approach. [2]
● A method used to calculate GDP by summing total spending on domestic output in an economy
Compiled by @oatsnwaffles
*Condensed for revision purpose
*The questions included are based on pure economic knowledge
2.1 the level of overall economic activity
N18/3/ECONO/HP3/ENG/TZ0/XX/M
State the four factor payments which constitute the income flow in the circular flow or income model. [2]
● Wages, rent, interest, profit
Define the term leakages. [2]
● A leakage represents the portion of national income which is not spent on domestic output/domestic
consumption
N15/3/ECONO/HP3/ENG/TZ0/XX/M
State the reason why a country's gross domestic product (GDP) may be greater than its gross national
income (GNI). [1]
● Factor income paid abroad exceeds factor income earned abroad
N14/3/ECONO/HP3/ENG/TZ0/XX/M
Explain the differences between GDP, green GDP & GNI. [4]
● The difference between GDP and GNI is that GDP is a measure of the value of output produced within the
boundaries of an economy independently of the nationality of the factors of production involved
whereas GNI is a measure of incomes received by the residents of a country independently of the
geographic location of the factors of production involved
● Green GDP focuses on the environmental cost of production by subtracting the costs of environmental
degradation from GDP
Outline the difference between nominal GDP & real GDP. [2]
● The real GDP adjusts nominal GDP for changes in the average price level (i.e. inflation)
M14/3/ECONO/HP3/ENG/TZ0/XX/M
Outline the difference between the expenditure approach & the income approach. [2]
● In the expenditure approach, total spending on domestic output is summed, whereas in the income
approach, incomes earned in the production of domestic output are summed
Outline the meaning of the term "green GDP". [2]
● Green GDP is GDP adjusted for the effects of production on the environment
N13/3/ECONO/HP3/ENG/TZ0/XX/M
Define the term expenditure approach. [2]
● A method used to calculate GDP by summing total spending on domestic output in an economy
Compiled by @oatsnwaffles
