L2 Flashcards
Define GDP?
The market value of all final goods and services produced within a country during a given period
What is meant by ‘market value’ and what happens for G+S that aren’t sold?
Price at which G+S are sold at
An imputed value is used for G+S that don’t enter the market place (ie. Public goods/services)
What economic activities are exempted from GDP? (4)
Non market productive activities (household chores)
Black market transactions
Financial transactions (stock market)
Income transfers (benefits)
What is meant by ‘final goods and services’?
Those which are purchase by their final consumers in the given time period
What does ‘final goods and services’ exclude intermediate G+S?
Because their value is included in the final cost of the product - wouldn’t want to ‘double count’
Define GVA via equation?
Gross value added:
= (ΣG+S produced in an economy) - (Σvalue of G+S used in production process)
What does gross mean?
Capital depreciated has NOT been allowed for
What is meant by ‘produced’?
Only newly produced G+S are incorporated
What happens to goods that are produced but not sold? (2)
1) deteriorates (eg. Mould) - tf no change to GDP
2) preserved (eg. Frozen) - tf essentially ‘sold to inventory’ tf GDP rises
What is meant by ‘within a country’?
Only produce within geographic borders is included
What is meant by ‘a given period’?
Must be produced in the given period to control unite to that year’s GDP
What is the first estimate of GDP?
Initial prediction 3.5weeks after the end of the quarter, based on output information
What is the 2nd estimate of GDP?
Based on more information, 8 weeks after end of quarter, tells level and growth of GDP
What is the 3rd estimate of GDP?
Full account (QNA), 12 weeks after end of quarter
What has UK’s GDP growth averaged since 1948?
2.6%
What are the three ways to measure GDP?
Output/production approach
Income approach
Expenditure approach
(All equal)
What is the output/production approach?
Σvalue added created through production of G+S
What is the income approach?
Total income generated by production of G+S by producers in the production of output (household income)
What is the expenditure approach?
Total expenditure on all finished G+S
Y=C+I+G+(X-M)
See circular flow of income
S2L2P14
