2.1.1 economic growth Flashcards
Economic growth
-Refers to a country’s increase in real GDP
-Signifies expansion of productive capacity
and key indicator of overall economic health
-Calculate percentage change in real GDP
Real vs nominal
Real: values adjusted for inflation
-represent changes in quantity of g+s produced
Nominal: not adjusted for inflation
-represent current market prices
Total vs per capita
Total: aggregate sum of a variable
Per capita: Average amount per person
Value vs volume
Value: monetary worth of g+s
Volume: Physical quantity of g+s produced
GNI
-Total income earned by a country’s residents and businesses
-Domestically and abroad
-Affected by overseas investments and remittances
Growth rate comparisons
Over time:
-Reveals patterns and trends
-Indentify periods in economic cycle
Beween countries:
-Assess relative economic performance
-Reveal disparities in development and highlight factors contributing to growth
PPPs
-Exchange rates that equalise the purchasing power of different countries for a common basket of goods
-Account for price differences
-Allow meaningful international comparisons
-Accounts cost of living so can better compare living standards
Limitations of using GDP to compare living standards
Quality of life concerns
-Does not measure factors like healthcare, education, overall well-being
-GDP might grow as people work harder but this may lead to mental and physical issues
Fails to record non-market transactions
-Household labour
-Informal economy
-Thus an incomplete picture
Inequality
-Conceals disparities in living standards
-uneven distribution
GNH
-Measures of national well-being to complement GDP
-Satisfaction, mental health, social connections, employment
-2010 - national well-being report
-HIgher incomes are associated with higher levels of happiness up until a certain point. It diminishes beyond a certain level of income
-Linked to social status
