Economic growth

Question 1

Economic growth

Answer 1

An increase in the production of goods and services (national output) in the economy in a period of time

Question 2

GDP

Answer 2

Total value of final goods and services produced within a country’s borders in 1 year

Question 3

Measures of GDP

Answer 3

Real national output
Real national income
Real national expenditure

Question 4

Measuring national output

Answer 4

Production occurs in phases, the outputs produced by one firm may be used as inputs. We distinguish between 2 types of goods, intermediate and final goods. Total output is the value of spending on all final goods and services.

Question 5

Intermediate goods

Answer 5

Outputs produced by one firm that are used as inputs by another

Question 6

Final goods

Answer 6

Goods purchased for consumption, investment or export.

Question 7

Examples of intermediate goods

Answer 7

Wood used for furniture
Glass used to make cups
Cotton used to make clothing

Question 8

What isn’t included in GDP figures

Answer 8

Intermediate goods
Used goods
Illegal activities
Unpaid work

Question 9

Real figures

Answer 9

Also known as relative or constant prices, they are nominal values that are adjusted for inflation to get a more accurate measurement of change.

Question 10

Nominal figures

Answer 10

Also known as current prices, are values that haven’t be adjusted for inflation. If inflation has occurred, nominal rates will be higher than real rates