Economic Growth Flashcards
Big mac index
The Big Mac index is a way of measuring Purchasing Power Parity (PPP) between different countries. By converting the average national Big Mac prices to U.S. dollars (S) the same goods can be informally compared. This can tell us something about whether a currency is under or overvalued in foreign exchange markets.
BRICS
The BRICS grouping – Brazil, Russia, India, China and South Africa – short-hand for the rise of emerging markets. The BRICs have a bigger share of world trade than the USA.
Constant price
Constant prices tell us that the data has been inflation adjusted.
Economic cycle
Variations in the annual rate of growth of real national output (GDP) over time.
Economic development
Long run improvements in broad measures of income per capita, education and health outcomes and reductions in extreme poverty, hardship and inequality.
Economic growth
An increase in the real value of goods and services produced as measured by the annual % change in real GDP. Also, a long-run increase in a country’s productive capacity.
Economic shocks
Unpredictable events such as volatile global prices for oil, gas and foodstuffs.
Economic stability
When growth, prices and unemployment do not change much from one year to another.
Emerging markets
Term commonly used to describe the financial markets of developing countries.
Full capacity output
Level of GDP where all available factor inputs are fully employed.
Globalisation
A process in which countries have become increasingly integrated and inter-dependent.
GNI
Income generated from resources owned by inhabitants and businesses of a country.
Green GDP
A popular term for environmentally adjusted gross domestic product.
Gross domestic product (GDP)
Total monetary value of output, spending and factor incomes generated within the geographical boundaries of a country in a given time period.
GDP per capita
National income per head of population, used as a baseline measure of living standards, measured by total GDP/resident population.
Human Development Index (HDI)
An index used to assess comparative levels of development in countries, quantified in terms of literacy, life expectancy and purchasing power as measured by real national income per capita (PPP adjusted).
Infrastructure
The transport links, communications networks, sewage systems, energy plants and other facilities essential for the efficient functioning of a country and its economy.
Lagging indicators
Indicators which tend to follow economic cycles e.g. unemployment.
Leading indicators
Indicators which predict future economic trends e.g. consumer confidence.
Macroeconomic performance
The overall performance measured by changes in output, investment, prices, jobs, trade and living standards and also the distribution of income and wealth.
Manufacturing
Manufacturing is one of the production industries, which also include mining, electricity, water & waste management and oil & gas extraction. In 2019, the UK manufacturing sector accounted for 2.7 million jobs,11% of total UK GDP.
National happiness
Societal and personal well-being looking beyond what an economy produces, to areas such as health, relationships, education and skills, housing quality, finances and the environment.
National income
The total income earned by all factors of production in an economy in a given time frame.
Nominal GDP
Monetary value of all goods and services produced expressed at current prices (i.e. unadjusted for the effects of inflation).
Nominal income
The level of income in a given time period (e.g. a year) which is unadjusted for the effects of inflation, also known as money income.
Per capita income
Income per head of the population – a measure of average living standards e.g. Gross national income per capita = GNI/total population.
Purchasing power
The buying power of a unit of currency. It is inversely related to the rate of inflation.
Purchasing power parity
PPP is an economic theory that compares different countries’ currencies through a “basket of goods” approach. According to this concept, two currencies are in equilibrium—known as the currencies being at par— when a basket of goods is priced the same in both countries, taking into account the exchange rates. Your purchasing power is the same in this situation.
Real disposable income
Income after taxes and welfare benefits, adjusted for the effects of inflation.
Real GDP
Nominal GDP adjusted for price changes, expressed at constant prices.
Real income
Nominal income adjusted for price changes, expressed at constant prices.
Real income per capita
Real value of household income per head of population = real GDP divided by the resident population.
Service industries
The service industries include the retail sector, the financial sector, the public sector, business administration and cultural activities. In 2019, the service industries accounted for 80% of total UK GDP and accounted for 83% of jobs.
