QUESTION

a)The product approach measures GDP by adding the market values of final goods and services newly produced in an economy. Many goods and services produced in an economy are not traded in the market, give any two examples of such goods and services which are not traded in the market. Explain how such goods are treated in measuring GDP.

b)Explain how these treated in measuring current year GDP of automobile industry.

a.Tires, seats, head lights.

b.Robots on the assembly line.

c.Engine which is produced in a foreign country.

d.The newly produced car but not sold in current period for which GDP is measured.

c)If we want to compare the performance of this industry in the last five years, which is the more important statistic: real GDP of the industry or nominal GDP of the industry? Why?

d) If this automobile industry employs many foreign workers, which is likely to be higher: GDP or GNP in this industry? Explain.