1.1 Economic Indicators and Economic Growth Flashcards
What are the Macroeconomic Objectives?
Economic Growth, Low inflation, Low unemployment, Satisfactory balance of payments, Low government borrowing, stable exchange rate, protected environment.
What is an Economic Indicator?
A statistic about how an economy is performing and how it is likely to perform
What is economic growth?
It is a measure of national economic performance.
What is the formula for economic growth?
Change in national output or income/ time
How do we measure national income?
Gross Domestic Product
What is GDP
The total market value of all goods and services produced over a period of time in a country.
What are other measures of Economic growth?
GDP,GNI,GNP
What does nominal mean?
measuring data at prices of the day
What does real mean?
Measuring data by taking inflation into account.
What is GDP per Capita?
Total GDP/ Size of Population
Limitations of growth indicators?
Transfer payments, accuracy of stats, comparing over time, comparing between AC and EDC and LIDC countries, Purchasing power, Happiness
Define transfer payments
Incomes paid to people with no output into the economy
Comparing over time
No need to use real, instead of nominal gdp
Changes in population
Inaccuracy of data
countries may use different data collection methods
countries differ in population size.
What is PPP?
An exchange rate of one currency for another which compares how much a typical basket of goods in one country compared to another.
What is a Limitation of PPP?
Doesn’t take into account non-monetary factors
