2.1 Measures Of Economic Performance Flashcards
1
Q
What are the 4 indicators of economic performance?
A
- Economic growth
- Unemployment
- Inflation
- Current account
2
Q
What does economic growth refer to?
A
- The rate of change in GDP between terms
- GDP is ‘gross domestic product’ and is a measure of the total goods and services produced in a country
3
Q
What does unemployment refer to?
A
- Number of people who are actively looking for a job but are currently without one
4
Q
What does inflation refer to?
A
- A sustained increase in general price level
- Leads to a fall in the purchasing power of a currency
5
Q
What does current account refer to?
A
- Difference in the value of the total exports (X)- total imports (M)
6
Q
What is GDP?
A
- Gross Domestic Product
- Measures total value of national output of goods and services produced in a given time period
- Within geographical boundaries of country
7
Q
What are the three main types of GDP calculations?
A
- Expenditure
- Incomes
- Output value
8
Q
What factors make up expenditure in GDP?
A
- Consumption (C)
- Government spending (G)
- Investment spending (I)
- Changes in value of stocks
- Exports (X)
- (negative) Imports (M)
9
Q
What factors make up income in GDP?
A
- Wages & Salaries
- Profits of businesses
- Rental income from land ownership
10
Q
What factors make up output value in GDP?
A
- These are the value added from each of the main sectors including:
- Primary (extraction)
- Secondary (manufacturing)
- Tertiary (services)
- Quaternary (research)
11
Q
What is value GDP vs volume GDP?
A
- Value GDP is monetary value of goods and services
- Volume GDP is the physical quantity of goods and services
12
Q
What is nominal GDP?
A
- Money data is not adjusted for inflation
- GDP is expressed at the current price of money
13
Q
What is real GDP?
A
GDP is adjusted for inflation, making it easier to compare to other years
- Prices are held at chosen base year
- =nominal value/price index X 100
- Price index = 100 + inflation
14
Q
What is GDP per capita?
A
- Total GDP/population
- Used to find economic output per person in a country
- Useful for finding out average income level per person in a country
15
Q
What are some limitations to GDP?
A
- Ignores distribution of wealth
- Doesn’t consider changes in working conditions
- Doesn’t include voluntary work
-Doesn’t measure well-being
16
Q
What is economic well-being?
A
- Quality of life and satisfaction
17
Q
What is economic growth?
A
- Sustained growth of real GDP over time
- Increases productivity in the long-run
18
Q
What is economic welfare?
A
- Measure of social & economic well-being
- Many aspects of this are not material
19
Q
How might well-being of a country be measured?
A
- Median household income
- Percentage living below a poverty line
- Life expectancy
- Literacy rates
20
Q
What is subjective happiness?
A
- Self-reported levels of happiness, determined through questionnaires
- May be affected by genetics, income, health and social influences
21
Q
What is the Easterlin Paradox?
A
- The idea that as average income rises, so does happiness, until a point
- After this point, other factors and changes leads to happiness not further increasing
22
Q
What is the happy planet index?
A
- An index that measures a country’s: life expectancy, well-being, inequality outcomes and ecological footprint to determine the countries that have the longest, most happy and most sustainable lives
23
Q
What is GNI?
A
- Calculates income of all residents
- = GDP + net primary income + net secondary income
- NPI is wages, salaries and income form a country’s resident abroad and foreign investments
- NSI is transfer of money between families in different countries as well as international aid
24
Q
What is PPP?
A
- Purchasing Power Parity is the idea that items should cost the same in different countries, based on the current exchange rate
- It measures how many units of one country’s currency is required to buy the same basket of goods as in another country
25
What is a PPP-adjusted international comparison?
- A global ranking for countries to show how much it costs for each of them to purchase the same goods
26
What is national income?
- Total level of output in an economy
- Is equal to national expenditure = national output
27
What are the 4 factors of production?
- Land
- Labour
- Capital
- Enterprise
28
What do firms provide to households?
- Goods and services
29
What do households provide to firms?
- Economic factors of production
30
What do firms gain from households?
- Expenditure money from consumption of goods and services
31
What do households gain from firms?
- Money in the form of wages and salaries
32
What are some injections into the circular flow model?
- Investment
- Government spending
- Exports
33
What are some leakages (withdrawals) from the circular flow model?
- Savings
- Taxes
- Imports
34
What does the 'land' factor gain?
Rent
35
What does the 'capital' factor gain?
Interest
36
What does the 'labour' factor gain?
Wages
37
What does the 'enterprise' factor gain?
Profits
38
What is a closed /open economy?
- An economy with/without interaction with foreign agents and economies
39
What happens if injections>leakages?
- Economic growth occurs
40
Unless told otherwise, what can we assume of injections and leakages?
- Total injections = total leakages
41
What is GNI?
Gross national income is the total amount of money earned by a nations people and businesses in a given period
