2.1 Measures of economic performance Flashcards
What is Gross Domestic Product?
GDP- The total value of goods and services produced in a country within a year
What is real GDP?
Real GDP strips out the effects of inflation
What is nominal GDP?
GDP with the effects of inflation
What is economic growth?
The rate of change of output - increase in the long term productive potential of a country
What is GNI?
Gross National Income - The value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends
What is GNP?
Gross national product - the value of goods and services over a period of time through labour and property supplied by citizens of a country both domestically and overseas
What are purchasing power parities?
An exchange rate of one currency for another and compares how much a typical basket of goods costs in one country compared to another
Problems of using GDP to compare standards of living
Inefficient at collecting or calculating data
The hidden market - people don’t declare their taxes so some incomes aren’t taken into account
Other problems of using GDP to compare standards of living
Inequalities
Quality of good and services
Spending
What is national happiness?
Societal and personal well-being beyond what an economy produces
What is inflation?
The general increase of prices in the economy
What is defaltion?
The fall of prices
What is disinflation?
A reduction in the rate of inflation
3 causes of inflation
Demand pull
Cost push
Growth of money supply
What is demand pull inflation?
An increase in AD causes inflation to rise as a shift causes a change in price