GDP Flashcards
What is GDP?
Gross domestic product
Market value of th final goods and services produced in a country in a given time period (in boarders)
What is GNP?
Gross National product
(if Germany had a factory in the US, outputs would be included in US’s GDP but Germany’s GNP)
When would a country be in a recession?
If GDP falls for 2 quaters in a row
What is the G7 and name the counties?
Industrialised countries that discuss gobal economic activity
- US, Uk, Canada, France, Germany, Italy and Japan
What is national accounts?
Record macro transactions, macropicture of what happens at an aggregate level
What is the UK’s national account called and what does it include
The Blue Book
Includes: UK’s GDP, Consumption, Trade Balance, PSNBR
What is PSNBR?
public sector net borrowing requirements
What does GDP need to be and how does it do it?
Accurate so removes depreciation
What are the 2 approaches to calculating GDP
- The expenditure approach
- Income approach
What is the expenditure aprroach?
Production to supply
To find out production look at how much was sold
Formula for the expediture approach and what do the letters mean
GDP = C + I + G + (X-M)
C - new goods/ services
I - New capital goods, inventories (anything produced in yr)
G - Gov purchases (not including spending on those economically inactive - no producing)
X - Net imports
M - Net exports (ROW)
Are shares in GDP
No as just an exchange of money
What is the income approach of GDP?
Production, Spending, Income
What are the 3 streams that the blue book separates income into
- compensation of employees
- Gross operating surplus
- Mixed income (renting)
What happens to the subsidies in final price?
They are taken out
Phases of economics developement
- Agriculture
- industrialization
- services (80% of UK)
What is nominal GDP?
Current market price (income and expediture)
PxQ
- without adjusting for inflation
what is real GDP
Values goods/ services using refernce base year, strips out inflation
What is Purchasing power parity (PPP)?
Exchange rates, compaing price levels of countries
Name some limitations of GDP
- Ignores household production (no tranaction like childcare)
- No underground economics activity (non legal transactions like drugs)
- Misses - Happiness, community, Human rights
- Doesn’t take into account economics growths sustainability
- Includes bombs and weapons as inventory
Alternatives to GDP
- Human development index
- Social progress index - measures social welfare (basic human needs, foundations of wellbeing, opportunity)
- Happiness, National wellbeing
Items in the income approach for GDP
- Compensation of employees
- Gross operating surplus
- Mixed income
- Gross domestic income
Indirect taxes less subsidies
