Economic Growth

Question 1

What is GDP?

Answer 1

Gross Domestic Product (GDP)- sum ➕ of value of all 🚘/🧹 produced in a year

Question 2

What does GDP also represent?

Answer 2

ALSO sum of all incomes earned & expenditure- earnings spent on produce

Question 3

How reliable is GDP as a measure on its own?

Answer 3

Meaningless on its own- need to know population size (GDP per capita), currency spending power etc

Question 4

What are potential negatives of increases in GDP?

Answer 4

ALTHOUGH ⬆️ in GDP = ppl having ⬆️ 🚘/🧹 BUT ⬆️ incomes = ⬆️ working hours, ⬆️ cost of living 🏠, ⬆️ stress, ⬆️ pollution from travelling 🚂, 🚙 etc

Question 5

What are the 2 types of economic growth?

Answer 5

1) Actual economic growth

2) Potential economic growth

Question 6

What is actual economic growth?

Answer 6

Actual economic growth- ⬆️ in real incomes or real GDP (adjusted for inflation)- … GDP ⬆️ = ⬆️ spending & ⬆️ incomes & ⬆️ output

Question 7

What is potential economic growth?

Answer 7

Potential economic growth- ⬆️ in productive capacity of nation

Question 8

What is the output gap?

Answer 8

Output gap- difference between actual & potential growth

Question 9

What are other national income measures?

Answer 9

1) Gross national income (GNI)

2) Gross national product (GNP)

Question 10

What is GNP?

Answer 10

Gross National Product (GNP)- GDP ➕ income domestic residents received from abroad ➖ income claimed by non-residents

Question 11

What is GNI?

Answer 11

Gross National Income (GNI)- GDP ➕ income paid into nation by other nations (… domestic & foreign income)

Question 12

When is GNP greater than GDP?

Answer 12

GNP > GDP if domestic residents hold stocks/bonds of others nations (& … receive foreign income)

Question 13

When is GDP greater than GNP?

Answer 13

GDP > GNP if income form country’s production flows to foreign ppl & foreign firms (income claimed by non-residents)