2.1.1 Economic growth Flashcards
What is economic growth?
How is it measured?
Economic growth is the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year.
It’s measured by the percentage change in real GDP per year and it’s also sure through a shift in a PPF.
What is real GDP?
It is adjusted for inflation
It is a macroeconomic measure of the value of economic output adjusted for price changes ( inflation ).
What is nominal GDP?
Nominal GDP is the total value of all goods and services produced in a country during a specific time, measured using current prices.
It doesn’t take inflation into account and does not reflect differences in the cost of living, so it can give a distorted view of how much the economy is actually growing. Unlike real GDP, which adjusts for inflation, nominal GDP can increase just because prices go up, not necessarily because more stuff is being produced.
Nominal GDP is more useful comparing national economies on the international market.
What is Total GDP?
It is the total value of the goods and services produced in a country during a specific period of time, usually a year.
What is GDP per capita?
GDP per capita is the total income of a country divided by the number of people living in that country.
“ Distinguish between value and volume”
…
What is GDP?
It is the total value of all goods and services produced within a country over a year.
-It measures the economic performance of a country and is often used to gauge the size of its economy.
What is GNI?
It is the total income earned by a country’s residents and businesses, regardless of where that income is generated.
-It includes all the income from domestic production, as well as any income earned by residents from investments abroad, minus the income earned by foreign residents from domestic investments.
What are the benefits of using GDP to measure living standards?
…
What are the problems of using GDP to measure living standards between countries?
1) Comparing currencies
2) Differences in income distribution.
3) Differences in the rate of inflation: real GDPs must be compared
4) Differences in population so GDP/capita should be calculated.
5) Methods of calculating and reliability of data may differ.
What are purchasing power properties, and what are they used for?
Purchasing power properties take into account the exchange rate and the cost of living in each country, they make meaningful comparisons between countries about average standards.
What are index numbers?
They are often used to help calculate changes in the economics indicators, for example GDP and inflation.
