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3.1.1 Name any TWO ways of measuring inflation - NSC Economics - Question 3 - 2023 - Paper 2
Question 3
3.1.1 Name any TWO ways of measuring inflation. 3.1.2 How does tourism positively contribute to the gross domestic product (GDP)?
Worked Solution & Example Answer:3.1.1 Name any TWO ways of measuring inflation - NSC Economics - Question 3 - 2023 - Paper 2
Step 1
Name any TWO ways of measuring inflation.
Answer
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Consumer Price Index (CPI): This index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
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Producer Price Index (PPI): This index measures the average changes in prices received by domestic producers for their output, reflecting changes in the costs of production.
Step 2
How does tourism positively contribute to the gross domestic product (GDP)?
Answer
Tourism can enhance GDP through direct and indirect contributions.
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Direct Contribution: Tourism directly generates revenue for the economy as visitors spend money on services such as accommodations, dining, and attractions.
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Indirect Contribution: It supports local suppliers of goods and services associated with the tourism sector, as well as creates jobs, leading to increased economic activity and higher GDP.