Quick Revision
A condensed, exam-ready snapshot of all 8 units — concepts, definitions, formulas, diagrams, common mistakes and top questions. Perfect for the night before the exam.
Key concepts
Final vs intermediate goodsStock vs flowDomestic territory & normal residentGDP/GNP/NDP/NNPMP vs FCReal vs nominal GDPValue added methodIncome methodExpenditure methodNFIA & the ladder
Definitions
National Income
NNP at factor cost — final output of normal residents in a year.
NFIA
Net factor income from abroad; bridges domestic and national income.
Depreciation
Consumption of fixed capital due to wear & tear.
GDP Deflator
(Nominal GDP ÷ Real GDP) × 100.
Formulas to remember
GNP = GDP + NFIA
GNP = GDP + NFIANNP = GNP − Depreciation
NNP = GNP − DepGDPfc = GDPmp − NIT
GDPfc = GDPmp − NITReal GDP
Real GDP = Nominal ÷ Deflator × 100Don't lose marks here
- Counting intermediate goods (double counting)
- Forgetting NFIA in national income
- Using MP instead of FC
- Treating stock variables as flows
Diagrams & top questions
Circular flow of incomeConsumption & saving curves
- Q1. Define GDP
- Q2. Compute national income by income method
- Q3. GDPfc → NNPfc conversion
Revise all 8 units
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