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Economics > Economics theme 2 > Flashcards

Economics theme 2 Flashcards

1
Q

What is GDP?

A

Sum of all goods and services produced in an economy over a period of time.

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2
Q

What is Economic growth?

A

Value of the percentage change in GDP

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3
Q

What is short term economic growth?

A

Annual percentage change in real national output

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4
Q

What is long term economic growth?

A

Long term expansion of productive potential of an economy

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5
Q

What word is used when GDP drops for two quarters?

A

Recession

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6
Q

What is the formula for percentage change?

A

(new value-old value)
—————————— x 100
old value

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7
Q

What is nominal GDP?

A

Value of goods and services produced in the economy over a period of time (current prices)

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8
Q

What is real GDP?

A

Value of goods and services produced in the economy over a period of time taking into account inflation (real values)

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9
Q

Whats the formula for real national output?

A

nominal national output
———————————– x 100
average price level

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10
Q

What is total national income?

A

The value of all goods and services produced in a country in a given year

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11
Q

What is per capita income?

A

Total income divided by the number of people in a country

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12
Q

What is gross national product (GNP)?

A

Value of all goods and services produced by domestic businesses

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13
Q

What is volume?

A

The quantity of goods and services produced in a country .

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14
Q

What does gross national income (GNI) measure?

A

Measures income received by a country both domestically and from assets/activities/net property income abroad

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15
Q

What is value?

A

Looks at the monetary worth of the goods and services produced in a country

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16
Q

What is Purchasing Power Parties (PPP)?

A

The rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country

Comparison between countries taking into account different cost of living

17
Q

What is inflation?

A

The sustained increase in the cost of living / fall in the purchasing power of money

18
Q

What is disinflation?

A

Fall in the rate of inflation

19
Q

What is deflation?

A

Decline in the general price level in an economy signified by an annual inflation rate below 0% (negative)

20
Q

What is inflation measured in?

A

CPI

21
Q

What are the limitations of CPI

A
  • CPI is not fully representative (inaccurate for ‘non typical’ household
  • Spending patterns (everyone will spend different amounts of money e.g single person from a family with two children)
  • Changing quality of goods and services ( price may rise as the quality of the good or service is being improved)
  • New products( CPI is slow to respond)
  • Substitutes (cheaper alternative)
  • Shocks ( shocks cause temporary price change)

Economics (2 decks)

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