Chapter 7: Introduction To Macroeconomics Flashcards
Define SOL
It refers to the average well being of residents of a country. There are 2 aspects to well being- material and non material well being.
Define material SOL
It measures the quantity and quality of goods and services accruing to each person in the country.
Define non-material SOL
It refers to the qualitative aspects of life such as health, literacy, stress levels etc.
Define GDP
It is the total money value of all final goods and services produced within the geographical boundary of a country within a period of time.
Define national income
It measures the monetary value of the flow of output of final goods and services produced in an economy over a period of time.
Define productivity
It is the measure of how efficiently resources are utilised to produce goods and services.
Define RGDP
It measures the money value of all final goods and services produced within the territory adjusted for price changes
How to calculate RGDP growth rate?
RGDP growth rate=Nominal GDP growth rate-inflation rate
What does it mean when there is an increase in RGDP per capita in the country?
More goods and services are available to each person in the country
How to calculate percentage change in RGDP per capita?
% change RGDP per capita= % change RGDP- % change in population
What is the Gini coefficient?
It measures the inequality of income distribution in a country. It varies from 0, indicating perfect equality to 1, indicating absolute inequality.
Limitations to measuring mat SOL over time
- inflation and deflation rate
- change in pop size
- income distribution
- type of goods being produced
- increased monetisation in an economy
Limitations measuring non mat SOL over time
- Leisure time
- Negative externalities
Limitations of measuring mat SOL over space
- inflation/deflation rate
- change in pop size
- qualitative changes in consumer goods
- distribution of income
Limitations in measuring non mat SOL over space
-amount of leisure time
- negative externality
