Lesson 3 - GDP Flashcards
What is GDP?
Market value of all final goods + services produced domestically within a time period
Why does GDP only account for final goods?
Avoids raw materials in order to prevent double counting
Name the 3 ways in which GDP can be measured?
Output measure
Expenditure measure
Income measure
What does output measure consider?
Value of goods + services produced by all sectors of the economy
Agriculture, manufacturing, energy, construction, service sector + government
What does expenditure measure consider?
Value of goods + services purchased by households + government
Investment in machinery + buildings
Value of exports - imports
What does income measure consider?
Value of income generated mostly in terms of profits + wages
How often is GDP calculated?
Every 3 months (Quarterly)
How id GDP calculated?
ONS (Office for National Statistics) Surveys of manufacturing + service industries
Who is information collected from and to what extent? (Quarterly GDP)
6000 Companies in manufacturing
25,000 Service sector firms
5000 Retailers
10,000 Companies in construction sector
Govt departments covering agriculture, education, energy + health
What is a ‘flash’ estimate of GDP?
Estimate released 25 days after a quarter
Provides policymakers with estimate of real growth
Why do these figures get revised?
Only 40% of data available at that stage
Revised as more is released
What is the GDP formula?
GDP = C+I+G+X-M
C: Consumer spending
I: Investment
G: Government spending
X-M: Exports - Imports (Net exports)
What are the positive impacts of rising GDP?
More jobs
More trade
Improved living standards
Improved quality of public services
What are the negative impacts of rising GDP?
Inflation
Environmental damage
