4.4.1.2 Growth and Uses of National Income Flashcards
Short-Run Growth
The actual annual percentage change in real national output.
Long-Run Growth
An increase in the potential productive capacity of the economy.
GDP Definition
Gross Domestic Product - The value of goods and services produced in the economy over period of time.
National Expenditure
The sum of consumption + investment + government spending + net exports.
National Income Definition
Adding up all an economy’s incomes (wages, interest, profits and rents).
National Output Definition
The value of output ffrom each of the main economic sectors.
Real GDP Definition
Gross Domestic Product - The value of goods and services produced in the economy over a period of time taking into account inflation.
Nominal Value
Expressed in monetary terms i.e. in current prices.
Real Value
Adjusted for inflation by judging figures against a base year.
How to convert from nominal to real terms
Real value = index of comparison period (usually the base year) divided by index of the current period. Multiplied by nominal value.
Total national income (GDP) definition
The value of all goods and services produced in a country.
GDP per capita definition
Total income divided by the number of people in the country. A better indicator not skewed by the population.
Volume Definition
The quantity of goods and services produced in a country.
Value Definition
The monetary worth of the goods and services produced in a country.
Gross National Income (GNI) Definition
The total level of income, GDP plus net income from abroad e.g. interest and dividends.
