measures of economic activity Flashcards
what are the three methods of measuring economic activity
incomes that firms pay out
total amount of output that is produced
total expenditure
which measurement is in the published data
an average of all of the 3 measurements
what does the income - side estimate show us
shows how households spend their incomes e.g. tells us the balance of CELL
what does the output - side estimate tell us
shows the economic structure of the economy e.g. the balance of primary, secondary and tertiary activities
what does the expenditure - side estimate show us
it shows how resources are being used e.g. what proportions are investment VS consumption
what is income
income is the amount of income that can be earned during a period of time
what type of concept is income
a flow concept
what is wealth
wealth is the accumulation of assets such as property or shares
what type of concept is wealth
a stock concept
why can an inequality in wealth lead to an inequality in income
because wealth can create an income flow
what does GDP stand for
gross domestic product
what is Nominal GDP
the value of national output of goods and services expressed at current prices
what is Real GDP
adjusts the level of money using a consumer price index
does real of nominal GDP consider inflation
Real
does real or nominal GDP give monetary values
Nominal
does real or nominal GDP have prices held at the level of a base year
Real
what does GNI stand for
gross national income
what does GNI mean
measures the final value of incomes flowing to UK owned factors
how do you calculate GNI
GNI = GDP + net property income overseas
what is viewed as the best indicator of a countries living standards
GNI
how do you calculate per capita income
per capita income = GDP / population
what does PPP stand for
Purchasing power parity
what is purchasing power parity
measures how many units of one country’s currency are needed to buy the same amount of goods and services as can be bought with a given amount of another currency
what happens to the PPP if there is a high living cost
there will be a downward adjustment will be made to the PPP adjusted GDP per capita
how do you calculate the Real GDP for a fixed year
Real GDP = money value in fixed year x 100 / general price index previous year
what is the national income accounting
the calculation of the total flow of income of a country overtime
