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Measuring Economic Activity and Illustrating Its Variations · Paper 1 — Free Economics SL Practice Questions
1MasterySAQ-SGross Domestic Product (GDP) and other measures of national income4 marksPaper 1~6 min
India's GDP has grown at an average rate of per year over the last decade. Indian workers abroad — particularly in the UAE and the USA — send remittances home, making India one of the largest recipients of remittances globally. In 2023, remittances to India totalled approximately USD 125 billion.
(a)
Draw a fully labelled circular flow of income for India. Your must include households, firms, government, and the foreign sector, and must show remittances a correctly labelled injection. [2 marks]
(b)
Using your , explain why an increase in remittances causes India's Gross National Product (GNP) to rise relative to its Gross Domestic Product (GDP), and assess whether GDP alone is a reliable indicator of Indian living standards. [2 marks]
Solutions
2MasterySAQ-SGross Domestic Product (GDP) and other measures of national income4 marksPaper 1~6 min
Vietnam recorded a GDP of USD 410 billion and a GNP of USD 400 billion in 2022. During the same year, multinational corporations such as Samsung and LG established large manufacturing plants in Vietnam, representing significant foreign direct investment (FDI) inflows.
(a)
Draw a fully labelled circular flow of income for an open economy, showing FDI as an injection. [2 marks]
(b)
Using your , explain why Vietnam's GDP exceeds its GNP, and analyse how a further increase in FDI inflows would affect this gap. [2 marks]
Solutions
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