2.1.1 Flashcards
Economic growth definition
Occurs when there is a rise in the value of gross domestic product
Gross domestic product
Measures the quantity of goods and services produced in an economy
What are the benefits of economic growth
Higher living standards
More employment opportunities
Real GDP
Value of GDP adjusted for inflation
Nominal GDP
The value of GDP without being adjusted for inflation
Total GDP
Combined monetary value of all goods and services produced
GDP per capita
Combined monetary value of all goods and services produced within a country’s borders during a specific time period
Volume of GDP
GDP adjusted for inflation
Size of the basket of goods and the real level of GDP
Value of GDP
Monetary value of GDP sat prices of the day
Gross national product(GNP)
The market value of all products produced in an annum by the labour and property supplied by the citizens of one country
Gross national income
The sun of value added by all producers who reside in a nation
Purchasing power parity
Theory that estimates how much the exchange rate needs adjusting so that an exchange between country’s is equivalent, according to each currency’s purchasing power
Limitations of using GDP
Does not give any indication of distribution of income
- may need to be recalculated in terms of purchasing power so that it can account for international price differences
- large hidden economies such as the black market
- no indication of welfare
National happiness
- UK national well-being
- the relationship between real incomes and subjective happiness
