Macro - Economic growth ✔️

Question 1

What is GDP?

Answer 1

GDP measures the value of all goods/services produced in a economy in a country.

Question 2

The 4 main components of GDP

Answer 2

Consumer expenditure, Investment, Government spending & net trade (exports-imports)

Question 3

Nominal GDP

Answer 3

The final value of goods/services within an economy without adjusting for inflation

Question 4

Nominal GDP

Answer 4

The final value of goods/services within a economy adjusting for inflation

Question 5

Total GDP

Answer 5

The total value of goods/services within an economy in a year

Question 6

GDP per capita

Answer 6

The average output/income per person, calculated by dividing a country’s GDP by its population

Question 7

Value of goods/services

Answer 7

This shows what certain goods/services are worth

Question 8

Volume of goods/services

Answer 8

The number of goods/services that a country produces.

Question 9

Gross National income (GNI)

Answer 9

GNI calculates input rather than output. It is worked out by taking the GDP figure and adding it to the income pains into the country in the form of dividends and interest etc

Question 10

Gross National Product (GNP)

Answer 10

The value of products goods produced by citizens regardless of their location (output of citizens working abroad is included)

Question 11

Purchasing Power Parities (PPP)

Answer 11

Purchasing power parity helps to compare the costs of living between countries. For example, if the basket of goods in the UK is the equivalent of $400 (after pounds have been converted to dollars), but the basket of goods in America is worth $800, then the purchasing power parity is 1:2. Therefore, although America may have a higher GDP per capita than the UK, American citizens will be worse off.

Question 12

Limitations of GDP

Answer 12

GDP does not take into account improvements in the quality and diversity of goods, as it counts their final value only.

Question 13

National happiness

Answer 13

GDP does not include unofficial or unpaid/goodwill work – Some workers may choose to do work for free and therefore earn no income from that work. Therefore, the value of the work produced is not included in the GDP figure.

Question 14

UK National well-being

Answer 14

Increases in real GDP may not be shared equally among an economy’s population

Question 15

What’s the relationship between real income and subject happiness?

Answer 15

Increasing income is commonly associated with increasing happiness and subjective wellbeing,