Gross National Income (GNI) – AS/A LEVELS/IB/IAL

Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes 

Gross National Income (GNI)

Gross National Income (GNI) measures both domestic and foreign incomes whereas GDP only records incomes domestically.

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the sum of all goods and services produced in a country over a specific time period.

AQA Spec – Additional Content

The use and limitations of national income data to compare differences in living standards between countries

• GDP does not given indications about a country’s distribution of income, it just measures the monetary value of goods / services produced in a country in a given period of time
• Two country’s which may have similar GDP’s may not necessarily have the same distribution of income
• GDP calculated in terms of Purchasing Power accounts for international price differences, cost of living and the inflation rate
• GDP also gives no indication of Economic Welfare

Purchasing Power Parity Exchange Rates

This theory relates to how much the exchange rate needs adjusting so that each currency’s purchasing power is equal between countries

This helps to reduce misleading and inaccurate comparisons between countries

Quick Fire Quiz – Knowledge Check

1. Define Gross National Income (2 marks)

2. Define Gross Domestic Product (2 marks)

3. Explain four uses / limitations of national income data to compare differences in living standards between countries (8 marks)

4. Explain Purchasing Power Parity in relation to exchange rates (3 marks)

Next Revision Topics

• Economic Growth
• What factors limit growth and development?
• Inequality
• Poverty and Inequality
• Measuring Economic Growth
• Strategies to promote Growth and Development

A Level Economics Past Papers

• AQA
• Edexcel
• OCR
• WJEC