Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define GDP and explain what “final”, “produced”, “within a country” and “in a given period” add to the definition. (Guide: “What GDP measures”)
- I can explain why intermediate goods, used goods, financial transactions and transfer payments are left out of GDP. (Guide: “What is not counted, and why”; Practice Q1)
- I can draw the two-sector circular flow and label the product market, the factor market, the money flows and the real flows. (Guide: Figure 1; Practice Q3, Q6(a)–(b))
- I can explain why total spending, total income and the value of output are equal. (Guide: “Why spending, income and output are equal”; Practice Q6(c))
- I can name the leakages and injections in the fuller circular flow. (Guide: “Adding government, banks and other countries”; Practice Q6(d))
Calculation
- I can sort transactions into C, I, G and net exports and calculate GDP with the expenditure approach. (Guide: Worked example 1; Practice Q5)
- I can calculate GDP with the income approach by adding wages, rent, interest and profit. (Guide: Worked example 1 check; Practice Q7(b))
- I can calculate value added at each stage of production and show that the total equals the price of the final good. (Guide: Worked example 2; Practice Q4, Q7(a))
- I can calculate nominal GDP from the prices and quantities of final goods. (Guide: Worked example 3; Practice Q2)
Reasoning
- I can explain why imports are subtracted and why a fall in inventories reduces investment. (Guide: “The expenditure approach”; Practice Q5(c))
- I can explain how adding every sale in a supply chain leads to double counting. (Guide: Worked example 2; Practice Q4, Q7(d))
All ticked? Move on to Topic 2.2, Limitations of GDP, or return to the course roadmap.