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Economics theme 2 > 2.1.1 > Flashcards

2.1.1 Flashcards

1
Q

What does GDP measure?

A

The total value of national output of goods and services produced in a given time period

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2
Q

What does the ONS(office for national statistics) collect?

A

Data from thousands of UK companies

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3
Q

What are the 3 methods to measure GDP?

A

Expenditure methods
Income method
Production method

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4
Q

How is GDP measured using the expenditure method?

A

Consumption + Investment + Government + Net exports

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5
Q

How is GDP measured using the income method?

A

Wages + Rental rate on capital + firm profits

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6
Q

How is GDP measured using the production method?

A

Final value of all goods and services - intermediate costs

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7
Q

What is manufacturing?

A

Process or business of producing goods in factories

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8
Q

What is short-run economic growth?

A

The increase in the real value of goods and services

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9
Q

How is short-run economic growth measured?

A

The annual percentage change in GDP

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10
Q

What is long-run economic growth?

A

An increase in a country’s productive capacity/ potential output

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11
Q

What is nominal GDP?

A

The monetary value of the national output of goods and services measured at current prices.

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12
Q

What is real GDP?

A

Takes inflation into account, where GDP is adjusted for changes in the price level

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13
Q

What are ways of measuring economic health?

A

Real GDP per Capita
Real Disposable Income
Gross National Income(GNI)

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14
Q

What is real GDP per capita?

A

Real income per head of population expressed at constant prices

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15
Q

What is real disposable income?

A

Real income after deduction in taxes + benefits, and adjusted to effects of inflation

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16
Q

What is gross national income (GNI)?

A

GDP plus net property income from overseas

17
Q

What is purchasing power parity?

A

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.

18
Q

What do we do to make a PPP (purchasing power parity) adjustment for compairng GDP?

A

Build a basket of comparable goods and services and look at the prices of that basked in different countries

19
Q

What are the key benefits of using real GDP when assessing changes in living standards?

A

-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

20
Q

What strategies are there to improve living standards?

A

-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

21
Q

What is the main indicator for the standard of living?

A

Real GNI per capita expresses at purchasing power parity

22
Q

When do living standards improve improve?

A

When a country sustains a rise in real per capita incomes and when the benefits of growth are widely spread.

23
Q

What factors make up the human development index?

A

Knowledge
Long and healthy life
A decent standard of living

24
Q

What is knowledge as a factor of the human development index (HDI)

A

An educational component made up of 2 statistics, mean years of schooling and expected years of schooling

25
Q

What is long and healthy life as a factor of the human development index (HDI)?

A

Life expectancy component calculated using a maximum value for life expectancy of 25 years and max value 85.

26
Q

What is decent standard of living as a factor of the human development index?

A

Gross national income per capita adjusted to purchasing power parity

27
Q

What are limitations of published data as a guide of living standards?

A

-Hides scale/depth of inequalities of income/wealth
-Change in leisure and working hours and working conditions
-GDP makes no allowance for depreciation of capital machinery/technology
-Unpaid work
Ignores household debt

28
Q

What does the ONS collect?

A

statistics on well-being

29
Q

What indicators does economic well-being include?

A

-Real GDP per capita
-Real household spending per head
-Median household income
-Household net wealth
-Un/employment rate
-Financial security

30
Q

What is median income?

A

The income of the middle household if all are ranked from lowest income to highest

31
Q

In 2021 what was the median income and mean income?

A

median was £31k mean was£37k

32
Q

What does subjective happiness refer to?

A

Self reported levels of happiness with one’s life

33
Q

What does the easterlin paradox concern?

A

Whether we are happier as our real living standards improve

34
Q

What does the Easterlin paradox argue?

A

That life satisfaction does rise with average incomes but only up to a point, beyond that marginal gain in happiness declines.

Economics theme 2 (16 decks)

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