Economic Growth 2.1.1

Question 1

what is economic growth?

Answer 1

it is the rate change of an output. it increases in the long term productive potential of a country which means there is an increase in the amount of goods and services produced. this is typically measured by the percentage change in real GDP per annum. it can also be shown through PPF.

Question 2

actual growth

Answer 2

measured by changes in Real GDP

Question 3

GDP

Answer 3

it is the standard measure of output which allows us to compare countries. its total value of goods and services produced in a year. this is an indicator of the standard of living.

Question 4

GDP Per Capita

Answer 4

is the total GDP divided by the number of people in a country. This grows if the national output grows faster than the population over a given time period, so there are many goods and services to enjoy per person.

Question 5

purchasing power parties (PPP)

Answer 5

An exchange rate of one currency for another which compares how much a typical basket of good in the country costs compared in another country. Alternative way of using exchange rates for comparison of the GDP.

Question 6

problems of using the GDP

Answer 6

• Inaccuracy of the data, Inefficient in collecting and calculation data.
• Hidden or Black market in which people work without declaring their income in order to avoid income tax or claiming benefits.
• Inequalities, increase in GDP may be due to growth in income because of a group of people and so therefore growth in national may not increase living standards.

Question 7

national happiness

Answer 7

An alternative way to measure the standards of living in a country. it measures national wellbeing. surveys attempt to measure subjective happiness.