2.1

Question 1

what is GDP

Answer 1

GDP - Measure of the value of all final goods and services produced in an economy over a specific amount of time.

it measures Measures growth measures living standards

Question 2

Real GDP VS Nominal gdp

Answer 2

Real adjusted to inflation
Nominal is not adjusted to inflation
GDP per capita = total GDP per person in the economy (GDP divided by population)
Useful in comparing individual living standards between countries

Question 3

negatives of real gdp and real gdp per capita

Answer 3

Negatives of using GDP and GDP Per capita
- Remittances
- Doesn’t take into account informal activities
c.g. cash-in-hand jobs
Tutoring, cleaning services, car wash
- GDP doesn’t measure quality education life expectancy
National happiness
Doesn’t take into account negative externalities
E.G. the cost of air pollution
doesn’t take into account FDI (more for GDP per capita)

Question 4

macroeconomic objectives

Answer 4

Inflation (2%)
Full employment (95%)
Economic growth (2.5%)
Balance of trade/payments

Question 5

what are living standards

Answer 5

the material well being of the average person in a given population