2.1.1 Econ Growth ✅

Question 1

What is short run?

Answer 1

Actual annual change in % growth in real national output.

Question 2

Long run econ growth is the increase in potential __ capacity in an economy.

Answer 2

Production

Question 3

What is GDP?

Answer 3

Gross domestic product - the total value of all goods and services produced in a country in one year. (Measure of growth + living standards)

Question 4

What two methods are used to calculate GDP?

Answer 4

Total expenditure or total income.

Question 5

Difference between nominal and real GDP?

Answer 5

Real GDP takes into consideration inflation however nominal does not.

Question 6

Equation for real GDP?

Answer 6

Nominal GDP/ deflator(inflation part)

Question 7

What is GDP per capita? What does it do?

Answer 7

Takes into account population. Used to more accurately compare living standards.

Question 8

Difference between value and volume?

Answer 8

Volume is describing actual amount being produced where value means the value of the actual products.

Question 9

Name other national income measures?

Answer 9

• Gross national income (GNI)
• gross national product (GNP)

Question 10

What national income adds foreign investments and subtracts income sent to other countries.

Answer 10

Gross national income.

Question 11

What national income calculates total product produced regardless of location?

Answer 11

Gross national product.

Question 12

Name the limit of comparing gni

Answer 12

Some countries don’t have official jobs so there will be inaccuracies.

Question 13

What is preferred when comparing countries and why? GDP or GDP per head?

Answer 13

GDP per head as it takes into consideration population differences.

Question 14

What are ppp?

Answer 14

Purchasing power parity.

Question 15

What do ppps do?

Answer 15

Estimate how much an exchange rate needs to be adjusted relative to purchasing power. Used to compare living standards.

Question 16

Name limits of using GDP to compare living standards/over time?

Answer 16

• Not include shadow economies.
• Income distribution (doesn’t consider inequality).
• Does not measure quality of life eg education, environment, wellbeing.

Question 17

What are some problems with comparisons between developed and non developed countries?

Answer 17

• Accuracy of stats.
• Developing countries often consume what they produce not in a market (subsidence farming).
• Developing achieve growth at expense of heath.
• developing increase profit a expense of quality of life.

Question 18

Who measured wellbeing?

Answer 18

ONS

Question 19

Label happiness categories?

Answer 19

• Health.
• Relationships.
• Environment.
• Health.

Question 20

Explain the easterlies paradox. + draw it?

Answer 20

When you are low income and receive more money your happiness increases.

High levels of income receive it money are not associated with increase in happiness.

(Increase consumption of material goods only increase happiness when basic needs are not met.)

Question 21

What are the benefits of GNI?

Answer 21

Unliked gdp it considers domestic income + income of foreigners in domestic country.