Growth Flashcards
Short-run Growth
the actual annual percentage change in real national output
Long-run Growth
An increase in the potential productive capacity of the economy
National expenditure
consumption + investment + government spending + net exports
National income
adding up all an economy’s incomes (wages, interest, profits and rent)
national output
the value of output from each of the main economic sectors
nominal value
expressed in monetary terms i.e. in current prices
real value
adjusted for inflation by judging figures against a base year
what are the limitations of GDP as a measure
- accuracy of statistics
- ignores work without a monetary value
-does not consider negative externalities - does not show inequality in distribution
happiness economics
looks at how content individuals are with their life from a theoretical and scientific viewpoint
Purchasing Power Parity (PPP)
equalising the purchasing power of two currencies by accounting for differences in inflation rates and cost of living in each country
what is the actual purchasing power of a currency
the quantity of that currency that is needed to buy a specified unit of a good or a basket of goods and services in that country
Market exchange rates
determined by the interaction of supply and demand for the currency
why is GDP is a useful measure
- shows the economic growth of a country, indicator of how the economy is doing
- easily comparable with other economies
- gives us an idea and efficiency of the people (GDP per capita)
what is the most common way of showing a countries quality of life
having a dashboard with the different data points where you can express your certain values
what are the limitations of GDP
- accuracy of statistics
- ignores some work
- negatives not considered
- inequality
- innovations
