Meaning and representation of economic growth Flashcards
What is economic activity
any behaviour or action that results in the supply or consumption of goods/services
What is gross domestic product (GDP)
the total value of goods and services in an economy over a given period of time
What is economic growth
an increase in the capacity of an economy to produce goods and services
How is economic growth measured
by comparing GDP in different periods of time
What is the method to calculate economic growth
divide the new value by the old value then - 1 and x 100
What is a pro about measuring data annually
it is good for measuring historic trends
What are the cons about measuring data annually
Obscure details
Time delays dilute usefulness to policy makers
What would a better method of measurement be
quarterly instead of annually
What is good about more frequent data measurements
more use to policymakers
Produces earlier warning signals
What is bad about more frequent data measurements
in initial 3 months estimates are often revised (not accurate)
Have to wait 6 months for confirmed figures
What four things impact the reliability of GDP data
- not directly measured
- is an estimate
- based on returns by a sample of companies and gov departments
- issue with incidence and magnitude of data revisions
What are the 5 problems with GDP
- exclude some economic activity
- not adjusted for tech advances
- resource depletion
- impacts of pollution
- unequal distribution of GDP
