key economic indicators Flashcards
what is real gdp per capita
the value of all final goods and services produced within the geographical boundaries of a country during a given time period, which is usually over one year, adjusted for changes in inflation rate
what is real gni per capita
the total income received by the country from its residents and businesses regardless of whether they are located in the country or abroad, adjusted for changes in inflation rate
what’s the relationship between real gdp per capita and real gni per capita
GNI = GDP + factor incomes earned by foreign residents – income earned in the domestic economy by non-residents
limitations of real gdp/ gni per capita
it does not take into account
1. non market activities
2. underground activites
- income distribution
- is skewed as production does not equal consumption if GDP rises because of I, G or (X – M)
what is labour productivity
the amount of goods and services produced for each hour of a worker’s time
what is green gdp
an index of economic growth that factors in the environment consequences of a country’s conventional GDP growth — it calculates the costs of resource depletion and environment degradation and subtracts these costs from a country’s GDP
what is the gini coeff
an indicator that measures income distribution among a country’s population and is indicative of inequality — it ranges from 0-1; the higher the coefficient, the more unequal the distribution of income
what is cpi
a weighted price index that measures the price of a fixed basket of goods and services commonly purchased by households — the types, quantities, and specifications of goods and services in the CPI basket are kept constant at the base period so that any changes in the index solely reflects price changes
limitations of cpi
overestimation due to
1. substitution bias
2. quality adjustment bias
3. new products
how to calculate unemployment rate
measure the percentage of employed persons over the labour force
limitations of unemployment rate
may either overestimate or underestimate the effective utilisation of labour resources due to the changing size of the labour force
match each BUGP goal to an appropriate indicator
AEG: real gdp/ gni per capita
sustainable EG: green gdp
PEG: labour productivity
inclusive EG: gini coeff
inflatiom: cpi index
unemployment: unemployment rate
match the goal of SOL to an appropriate indicator
HDI — composite indicator that provides a more comprehensive and holistic assessment of a country’s standard of living by measuring healthcare (LE), education (expected & mean years of schooling) and MSOL (PPP adjusted real gni per capita)
MSOL: real gdp per capita
nMOL: healthcare, education, stress levels, environmental pollution, security
what is ppp adjusted exchange rate values and what is it used for
PPP adjusted exchange rate values adjust the nominal exchange rate for differences in costs of living, to allow for comparisons of COL across countries
limitations of ppp adjusted exchange rate values
there may be differences in
1. population
2. consumption patterns
3. accounting procedures
