2.1.1 Flashcards
What does GDP measure?
The total value of national output of goods and services produced in a given time period
What does the ONS(office for national statistics) collect?
Data from thousands of UK companies
What are the 3 methods to measure GDP?
Expenditure methods
Income method
Production method
How is GDP measured using the expenditure method?
Consumption + Investment + Government + Net exports
How is GDP measured using the income method?
Wages + Rental rate on capital + firm profits
How is GDP measured using the production method?
Final value of all goods and services - intermediate costs
What is manufacturing?
Process or business of producing goods in factories
What is short-run economic growth?
The increase in the real value of goods and services
How is short-run economic growth measured?
The annual percentage change in GDP
What is long-run economic growth?
An increase in a country’s productive capacity/ potential output
What is nominal GDP?
The monetary value of the national output of goods and services measured at current prices.
What is real GDP?
Takes inflation into account, where GDP is adjusted for changes in the price level
What are ways of measuring economic health?
Real GDP per Capita
Real Disposable Income
Gross National Income(GNI)
What is real GDP per capita?
Real income per head of population expressed at constant prices
What is real disposable income?
Real income after deduction in taxes + benefits, and adjusted to effects of inflation
What is gross national income (GNI)?
GDP plus net property income from overseas
What is purchasing power parity?
How many units of one country’s currency are needed to buy the same basket of goods and services as can be bought with a given amount of another currency.
What do we do to make a PPP (purchasing power parity) adjustment for compairng GDP?
Build a basket of comparable goods and services and look at the prices of that basked in different countries
What are the key benefits of using real GDP when assessing changes in living standards?
-Easy to make comparisons over time
-Easy to compare different countries
-Correlates with other measures of living standards
-Higher income generally correlates with being able to buy more goods and services
What strategies are there to improve living standards?
-Improving human capital
-Getting people into property-paid work
-Living wage to lift labour productivity
-Accessible/high quality services
-Better/affordable housing
-Wealth from successful businesses
What is the main indicator for the standard of living?
Real GNI per capita expresses at purchasing power parity
When do living standards improve improve?
When a country sustains a rise in real per capita incomes and when the benefits of growth are widely spread.
What factors make up the human development index?
Knowledge
Long and healthy life
A decent standard of living
What is knowledge as a factor of the human development index (HDI)
An educational component made up of 2 statistics, mean years of schooling and expected years of schooling
