2.1.1 Economic growth Flashcards
what is GDP?
gross domestic product,the market value of all final goods and services produced domestically in a time period
how is GDP measured ?
- output measure,value of all goods and services produced by all sectors of the economy
- expenditure measure,value of goods and services purchased by households and govt,including exports-imports
- income measures, value of income generated mostly in terms of profits and wages
what is GDP used for ?
to determine the health of the economy and by the bank of england and its monetary policy committee as a key indicator when setting interest rates
what is the formula for calculating GDP?
C+I+G+X-M
consumption + Investment + government + exports - imports
what’s real GDP?
a measure of a countrys GDP that has been adjusted for inflation
what’s nominal GDP?
the figure given without taking inflation into account
what’s GDP per capita ?
total GDP/population
what’s gross national income ?
another measure of national income,same as GDP expect it adds what a country earns from overseas investments and subtracts what foreigners earn in a country and send home
what’s purchasing power parity ?
PPP is how many units of one countrys currency are needed to buy the same basket of goods and services as can be bought with the given amount of another currency,eg £20,000 is worth more in south africa than england
why do we use GDP per capita at PPP?
as it gives a much better representation of living standards
benefits of using GDP to measure living standards ?
-easy to compare over time
-easy to compare with other countries
-correlates with other human development index
-having a higher income generally means you can buy more goods and services
flaws of using GDP to measure living standards ?
-inaccurate data,GDP tends to understate national income per capita due to the shadow economy (illegal activities)
-ignores quality
-doesn’t account household debt
- defensive expenditures (money spent on enviroment)
- value of unpaid work (volunteering)
what’s economic well being ?
a new statistic collected by ONS that considers personal life satisfaction,anxiety and stress of citizens
- it takes into account;
-real household spending per head
-real GDP per capita
-median household income
-unemployment and employment rate
-financial security of households
what’s the easterlin paradox ?
are we happier and more content if our living standards are higher,idea that happiness is measure via emotions not possesions
whats economic growth ?
sustained growth of real GDP over time,contributes to rising average living standards and a long run increase in a countries productivity
