2.1.1 - Economic Growth

Question 1

What Is Economic Growth?
(2 Points)

Answer 1

~ The rate of change of output, it is an increase in the long term productive potential of the country.
~ Meaning it is an increase in the amount of goods and services that a country produces.

Question 2

How is Economic Growth typically Measured?
(2 Points)

Answer 2

~ By the % change in real GDP per annum.
~ It can also be shown through a shift of the PPF.

Question 3

How Can You Determine Economic Activity In An Economy?

Answer 3

Measure the rate of change of output in an economy.

Question 4

What Is GDP?
(2 Points)

Answer 4

~ Is the output of an economy.
~ Is the total value of goods and services produced in an country within a year.

Question 5

How Can You Measure GDP?
(3 Points)

Answer 5

~ Expenditure approach.
~ Income approach.
~ Both approaches should provide the same figure as one party’s expenditure is the another’s income.

Question 6

What Is The Expenditure Approach?

Answer 6

Adds up the value of all the expenditure in an economy.

Question 7

What Is The Income Approach?

Answer 7

Adds up the rewards for the FOP used.

Question 8

What Is Nominal GDP?

Answer 8

Is the actual value of all goods and services produced in the economy in a one year period, which has not been adjusted for inflation.

Question 9

What Is Real GDP?

Answer 9

Is the value of all goods and services produced in the economy in a one-year period, has been adjusted for inflation.

Question 10

What Is GDP Per Capita?

Answer 10

Shows the mean wealth of each citizen in a country, making it easier to compare standards of living.

Question 11

How Do You Calculate GDP Per Capita?

Answer 11

GDP / Population

Question 12

Why May GDP Not Be The Best Metric To Measure A Country’s Output?

Answer 12

Does not consider the income earned by its citizens while operating outside of the country.

Question 13

What Is Gross National Income (GNI)?

Answer 13

Measures the income earned by citizens operating outside of the country’s borders and also adds the GDP.

Question 14

What Is Gross Nation Product (GNP)?

Answer 14

The value of goods and services over a period of time through labour or property supplied by its citizens of a country both domestically and overseas.

Question 15

How Do You Calculate GNP?

Answer 15

GDP + Income From Abroad - Income Sent By Non Residents To Their Home Countries.

Question 16

What Are National Income Statistics Useful For?
(4 Points)

Answer 16

~ Making comparisons between countries.
~ Providing insights on the effectiveness of government policies.
~ Allow judgements to be made about the relative wealth and standard of living within a country.
~ They allow comparisons to be made over the same or different time periods.

Question 17

What Do Changing National Incomes Levels Show Us?

Answer 17

Whether a country has grown or shrunk over a period of time.

Question 18

What Provides Better Information GDP Per Capita Or Real GDP, And Why?

Answer 18

GDP per capita as it takes into account the population differences.

Question 19

What Are Purchasing Power Parities (PPP)?
(3 Points)

Answer 19

~ Is a conversion factor that can be applied to GDP, GNI and GNP.
~ It calculates the relative purchasing power of different countries.
~ Shows the number of units of a countries currency that are required to buy a product in the local economy.

Question 20

What Is The Aim Of The PPP?

Answer 20

Help make a more accurate standard of living comparison between countries where goods and services cost different amounts.

Question 21

What Are Limitations Of Using GDP For Comparisons?
(5 Points)

Answer 21

~ Inaccuracy of data.
~ Inequalities.
~ Quality of goods and services.
~ Comparing different currencies.
~ Spending.

Question 22

How Is National Happiness Measured?

Answer 22

By the office of national statistics.

Question 23

What Does Happiness Focus On?
(6 Points)

Answer 23

~ Health.
~ Relationships.
~ Environment.
~ Education.
~ Satisfaction at work.
~ Living conditions.

Question 24

How Are Happiness And Income Related At Low Incomes?

Answer 24

Positively.