measures of Econ growth

Question 1

why is measure of national income important

Answer 1

-allows government to assess economic activity
-see if they are meeting macro targets
-see if policies are working
-allows consumers, government and businesses to forecast
-can look at living standards

Question 2

measure of GDP

Answer 2

-GDP is the final value of all goods and services produced in an economy in a year

-income=output=expenditure
-measures growth and living standards

issues: double counting, no account of informal or black market activity, errors given data, no negative externalities, income inequality and output produced

Question 3

measures of GDP/capita

Answer 3

-it is the total GDP/population

-same issues as with the measure of GDP
-factor income abroad + significance of remittances (domestic workers working abroad and money sent back) does not take into account
-influence of FDI and repatriation (sent back) of profit. FDI could distort the figure and it counts

Question 4

GNI (per capita)

Answer 4

-gross national income
=GDP + net factor income,
-income earned by domestic workers/firms - income earned by foreign workers at home

-all issues as GDP

Question 5

Green GDP

Answer 5

-accounts for environmental costs of production
-Green GDP = GDP - environmental costs

issues: monetary value on environmental costs difficult
-GDP could fall dramatically