Economic growth Flashcards
What is real GDP
Value of goods and services produced in an economy over time adjusted for inflation and measured at constant prices.
What is the nominal GDP
Value of national output at current prices with no adjustment for the effects of inflation
Per capita meaning
Per head of population
What is GNI
The final value of incomes flowing to a country’s owned factors of production whether they are located in the country or overseas
4 main macroeconomic objectives
Rate of economic growth
Rate of inflation
Level of unemployment
State of the balance of payments
What is economic growth
The speed at which national output grows over time
An increase in GDP
What is purchasing power
The real value of an amount of money in terms of what you can actually buy with it usually expressed in US dollars.
Why is the use of PPP good
More accurate
Easier comparison
Limitations of using GDP (6)
Blackmarket activity not registered Errors in data collection Negative externalities ignored Income inequality Kind of output produced There are other factors to increase living standards
What are booms
Large periods of high economic growth
What is negative economic growth (recession)
2 consecutive quarters (3 months) of decline
What is a slump
Long recession
What is an economic depression
Worse then recession
Sustained economic downturn lasting a long period of time
Short-run economic growth meaning
in increase in AD , using spare capacity to increase output
Long-run economic growth meaning
An increase in the potential productive
the capacity of the economy.
