Few candidates attempted this question and majority of them were unable to define Gross Domestic Product in the (a) part. Most of the candidates were also unable to describe the output approach of computing national income. The problems associated with the expenditure approach of calculating national income was also not identified by many candidates in the (b) part of the question. Their performance in this question was below average.

The candidates were expected to answer thus:

(a) Gross domestic product is the total money value of all final output of goods and services produced within the boundaries of a country during a specified period of time, usually a year.
(b) The output approach calculates the Gross Domestic Product of a country by adding together the values of the net contributions of all the various sectors of the economy. To avoid double counting, either the value-added at every stage of production is added together or the value of only the final output of goods and services produced in the economy is considered. The value of exports is included while the value of imports is excluded to arrive at Gross National Product. The value of the physical wear and tear of capital goods used during production called depreciation must be    deducted to arrive at the Net National Product at                market price.  Indirect business taxes are then deducted and subsidies added to arrive at national income which is at factor cost.
(c)  (i) Problem of determining the values of all imports and all exports since many transactions do not pass through the official channel.

      (ii) There is the problem of double counting as intermediate and final expenditures are sometimes included.
(iii) There is inadequate records of the expenditures of the households and business units in the informal sector.
(iv) Services not paid for such as owner occupied houses and do-it-yourself activities lower the national income e.g. communal labour on a project.
(v) Problem of deciding which method of depreciation allowance to be used.
(vi) Frequent changes in price and the value of money make determination of the value of goods difficult.