2.1.1 - Economic Growth Flashcards
What Is Economic Growth?
An increase in real GDP.
How Is Economic Growth Calculated?
% Change In Real GDP = % Change In Nominal GDP - Inflation Rate
What Is GDP?
(2 Points)
~ Total value of goods and services produced in a country.
~ Measure of growth and living standards.
What Is Nominal GDP?
GDP, which hasn’t been adjusted for inflation.
What Is Real GDP?
GDP, which has been adjusted for inflation.
What Is Total GDP?
Overall GDP for the country.
What Is GDP Per Capita?
(2 Points)
~ Average measure of individual incomes in the economy.
~ Making it easier to compare living standards between countries.
How Is GDP Per Capita Measured?
Total GDP / Population
What Is Meant By ‘Value’?
Monetary worth.
What Is Meant By ‘Volume’?
Physical number.
What Is GNI?
Measures incomes earned by citizens operating outside the country and the GDP.
How Is GNI Calculated?
GDP + Net Incomes Abroad
What Are The Limitations Of Using GDP?
(4 Points)
~ Ignores population changes.
~ Ignores income distribution.
~ Ignores the types of goods and services being produced.
~ Ignore underground economies.
What Are Purchasing Power Parities (PPP)?
(2 Points)
~ Calculates the relative purchasing power of different currencies.
~ The aim is to make a more accurate standard of living comparison between countries, where goods and services cost different amounts.
How Is Happiness Measured In The UK?
National well-being survey, consisting of 4 questions.
What Is The Relationship Between Real Incomes & Subjective Happiness?
(2 Points)
~ Easterlin paradox.
~ As incomes increase, marginal happiness begins to fall.
