2.1.1

Question 1

What is GDP

Answer 1

Standard measure of value of output of g/s produced in an economy over a period of time

Question 2

What’s economic growth?

Answer 2

Increase in rate of change of output. Increase in Productive potential in an economy

Question 3

What’s the difference between r between value and volume

Answer 3

Volume is the real value of national income ( accounts for inflation ) value is the nominal value.

Question 4

what’s a GNI?

Answer 4

Gross national income is the domestic value of goods and service produced in an economy at a time+ net overseas interest payments and dividens + investments from overseas sent back and remittances. But Take away incomes from foreigners that are sent abroad.
Used more becasue increased aid and remittances.

Question 5

What’s GNP

Question 6

What’s 2 methods of comparing growth?

Answer 6

One method to compare growth in a country is national income. If using real per capita incomes (not swayed by population of inflation fluctuations) can help determine living standards and can be compared to similar countries to see relative growth.

Other way if GDP to compare countries use real per capita as well for the same reason.

Question 7

What’s are PPP

Answer 7

Purchasing power parities is used to compare COST OF LIVING between countries and is a basket of common goods and the price of it is compared it other countries exscmpke is the bugac index. Helps compare cost of livinn eg. In Kenya £2 enough to live on in their currency.
ALTERNATIVE TO EXCHANGE RATES FOR COMPARING GDP.

Question 8

Problems with GDP to compare living standards

Answer 8

• doesn’t take chnage in quality into account
• ignores transfer payments eg. Pocket money or 2nd hand goods
• doesn’t take distribution into account
• ignores black markets
  -ignores externalities or environmental impacts
• IGNORES VARIATION IS COUNTIRES METHODS OF CALCULATIONS AND MAY BE INACCURATE IF INFLATION RATE IS
• IGNORES HOME PRODUCED GOODS

Question 9

National happiness

Question 10

What’s the correlation between happiness and income

Answer 10

Easterlins paradox states that on lower incomes as people’s incomes and this consumption rise so does happiness
But - EVAL
Diderot effect states acquiring one new possession may lead to another and then spiral of consumption.
Can argue marginal utility will fall as a result