Economic Growth Flashcards
What is Economic Growth
The long-run increase in a countries productive capacity
What are nominal values
Monetary values at the given period of time at constant prices
What are real values
Values where inflations are taken into account
What is per capita
Per person / Per head
What is real disposable income
Income after the deduction of taxes + benefits adjusted for the effects of inflation
Why may Economic Growth differ by country at any given period of time?
Countries could be in different stages of the trade cycle
What is GNI and how do you calculate it
Gross National Income
GDP + Net Property Income Overseas
What is GNI per capita used for?
The Human Development Index
What is the HDI
A measurement of national well-being which takes into account social + economic factors
What is Purchasing Power Parity and what is it usually expressed in and why?
How much a basket of goods would cost in one countries currency in a different country
The USD due to the size of the U.S economy
What can PPP be used as a measure for
Exchange Rates
How strong/weak a countries currency is in comparison to other countries
What is commonly used to measure PPP and why
The Big Mac Index
A product widely available in different countries which is of the same composition/size with the same resources used in production
What is the Easterlin Paradox
Concerns if we are happier as our real living standards improve
Within a society, richer people tend to be happier than poorer people
Only get happier up to a certain point, then we suffer from marginal diminishing happiness
What doesn’t GDP take into account
Shadow Economy
Tax Fraud
Black Market
What is the main indicator for standard of living and what drawbacks does it have
GNI per capita expressed at PPP
Doesn’t take into account inclusive growth
