Q.
Explain the following terms:-
a) Gross Domestic Product.
b) Direct tax.
c) Indirect tax.
d) Consumer Price Index.
e) Balance of Payment.
(20 marks, 2011 Q8)
A.
a) Gross Domestic Product - GDP is the total amount of goods and services produced by means of production which are domestically located in one years time. In Wikipedia it is explained as:
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or over a given period of time. GDP per capita is often used as an indicator of a country's material standard of living.[2][3]
GDP can be determined in three ways, all of which should, in principle, give the same result. They are the production (or output) approach, the income approach, or the expenditure approach.
The most direct of the three is the production approach, which sums the outputs of every class of
enterprise to arrive at the total. The expenditure approach works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers," colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.[6]
Ref:
Wikipedia from: http://en.wikipedia.org/wiki/Gross_domestic_product
b) Answer for Direct tax
c) Answer for Indirect tax
d) Answer for Consumer Price Index
e) Answer for Balance of Payment