Economic Growth and Circular Flow Flashcards
what is national income
measures the total value goods and services produced in an economy over a period of time usually a year
what is economic growth and how is it measured
an increase in the productive potential of an economy
measured using GDP/real GDP
what are some limitations of using GDP to compare living standards?
-inaccurate information
-unrecorded or under-recorded economic activity
-illegal market activity not recorded
-external costs
-doesn’t take into account life expectancy, infant mortality rates, literacy rates
what countries had the largest GDP per capita in 2022? and why?
Luxemburg - banking
Norway - oil
Ireland - multinational corporations
what was the average GDP per capita in 2021 in:
-the uk
-london
-wales
uk- £32,000
London - £56,000
Wales - £24,000
what are the 5 main economic objectives
- sustainable GDP growth
- stable price levels - inflation 2%
- low unemployment 3-4%
- sustainable trade balance
- sustainable FISCAL balance, gov finances
what is actual economic growth
an increase in real GDP of an economy
what is potential economic growth
an increase in the productive capacity of an economy. A shift right of LRAS or PPF
what is export led growth
where economic growth is caused by increased exports
what is gross national product (GNI/GNP)
the total income earned by a country’s factors of production wherever they are located
what is the formula for gross national product (GNI/GNP)
GDP + net property income from abroad
what is real GDP
the total value of goods and services produced in the economy in a year taking the rate of inflation into account
what is the formula for real GDP
GDP in current prices (nominal) / price index
where is the UK on GDP world wide
sixth largest
what was the UK GDP in 2022?
£2.2 trillion
what industry is the largest in the uk?
services- 80% of employment in 2022 and economic output
what are the 6 largest economies in order
USA, China, Japan, Germany, India, UK
what does GDP per capita help us to understand
the standard of living in a country
what is the formula for GDP per capita
total GDP / size of population
what is GDP per capita
economic output per person
which sector provides 80% of all economic output
services
what is gross domestic product (GDP)
the total value of all goods and services produced in an economy in a year
or
the total value of all spending in an economy in a year
what is the expenditure method of measuring GDP
the total value of all spending in an economy in a year
what is the output method of measuring GDP
the total value of all goods and services produced in an economy in a year
