Economic growth Flashcards
what is the definition of GDP
the value of all finished goods/services output in an economy in a year
what are some benefits and limitations to GDP as a measure?
benefits:gives a measure of growth, gives a measure of living standards
limitations:GDP per capita is an average, errors can be made(estimate)
how is GDP per capita calculated
Total GDP/population
what does GNI stand for?
Gross national income
how is GNI calculated
GDP+net primary income+net secondary income
what does GNI calculate
calculates income rather than output
what is net secondary income
money between countries,money sent home from overseas(remittance)
what is net primary income?
wages earned by countries residents working overseas
how is GDP(aggregate demand) calculated
AD=C+I+G+(X-M)
what is a recession
2 consecutive quarters of negative economic growth
what is short run economic growth
an increase in real GDP, i.e an increase in actual output, e.g from Y to Y1 but before YFE
what is long run economic growth
LR economic growth, also known as potential growth is a sustained rise in a countries productive potential, for long run economic growth there needs to be an increase in Q2 CELL
in conclusion what is the distinction between long run and short run economic growth
Sr is an increase in real GDP, e.g Y to Y1 but before YFE, typically affected by a shift in AD. LR is driven by an increase in LRAS and is potential growth e.g YFE to YFE1
what is Export-led growth
a development strategy in which a country focuses on increasing exports as a driver of expansion
what are key features of export-led growth
-specialisation
-foreign exchange
-economies of scale
what are some risks associated with export-led growth
-vulnerability to external shocks
-dependancy on volatile commodity prices
trend in the UK GDP growth over last 10 years
Over the last decade, the UK’s GDP growth has been generally slow, with significant fluctuations due to external factors like the 2008 financial crisis, the Covid-19 pandemic
