Growth and uses of national income notes Flashcards
What is Short-Run Growth?
-The actual annual percentage change in real national output.
What is Long-run Growth?
-An increase in the potential productive capacity of the economy.
What is Real GDP?
- The value of goods an services produced in the economy over a period of time that also takes inflation into account.
What is GDP?
-The value of goods an services produced in the economy over a period of time.
-This is a key measure of the health of an economy.
What is National Expenditure?
-Consumption + investment + government spending + net exports.
What is the National Income?
-Adding up all an economy’s incomes (wages, interest, profits and rent.
What is the National Output?
-The value of output from each of the main economic sectors.
What is the relationship between National Income, National Expenditure, National Output?
-National Income = National Expenditure = National Output.
-One person’s expenditure is another’s income.
What are the four main economic sectors to measure the value of Output?
-Primary
-Secondary
-Manufacturing
-Quarternary
What is a nominal value?
- A value expressed in monetary terms.
What is Real value?
-Adjusted for inflation by judging figures against a base year.
How do you convert from nominal to real terms?
-Real value= index of comparison period (usually base year) divided by index of current period.
-This should then be multiplied by the nominal value.
What is the total national income?
-The value of all goods and services produced in a country.
What is the Per capita income?
-Total income divided by the number of people in the country. (i.e: total GDP per person).
-This is a better indicator as it is not skewed by population.
-Used to compare standards of living across countries.
What is the volume of GDP?
-The quantity of goods and services produced in a country.