Frequently Asked Questions

• How do you calculate the GDP of a country?

  There are three main ways to calculate GDP, the production, expenditure, and income methods. The production method adds up consumer spending (C), private investment (I), government spending (G), then adds net exports, which is exports (X) minus imports (M). As an equation it is usually expressed as GDP=C+G+I+(X-M).

  Learn More: How to Calculate the GDP of a Country
• What are the four factors of production?

  The four factors of producღtion are land, labor, capital and entrepre𒁃neurship.

  Learn More: ✨Why Are the Factors of Production Important to Economic Gro𓆉wth?
• What is the diff🅰erence between nominal GDP and real GDP?

  Nominal gross domestic p🐓roduct (GDP) is the unadjusted GDP number. Whenever an economic figure is adjusted for inflation it is referred to as a real figure, so real GDP is nominal GDP adjusted for inflation.

  Learn More: Real GDP vs. Nomin🗹al GDP: Which Is a Better Indica✨tor?
• What Is Purchasing Power Parity (PPP)?

  PPP is ꦓa way of measuring the price of goods and services between countries while adjusting for the relative exchange rates of their currencies. It is an attempt to♍ better understand what people can buy and produce in a country without the differences in relative value of each country’s currency distorting it.

  Learn More: What Is Purchasing Power Parity (PPP)?