Measures Of Economic Groe Flashcards
What is economic growth
Economic growth refers to an increase in the amount of goods and services produced by an economy and occurs due to a long term increase in the productive potential of an economy
What are the 4 measures of economic growth
- GDP
- GDP PER CAPITA
- GNI
- GREEN GDP
What is gdp
GDP refers to the total value of goods and services produced in an economy in a year
What does gdp allow us to measure
- economic growth and living standards
What are some problems with GDP as a measure of economic growth
- Inaccuracy of data
- inequalities
- doest take into account overseas assets incomes and remittances
- not all types of expenditure contribute to improving living standards
How is gdp data inaccurate
- some countries are inefficient at collecting or calaculating the value of all goods and services in an economy
- gdp doesn’t take into account the hidden or black market -> not all incomes are calculated in the gdp which leads to real GDP being underestimated
- ## gdp doesn’t take into account home-produced services such as subsistence agriculture or diy services in uk
How does gdp nto show inequality
Gdp looks at a rise of income however this may only be a rise in income of one group of people so therefore gdp doesn’t take into account inequalities in an economy so it is not a accurate measure of living standards
- GDP OER CAPITA MAY BE A BETTER SOLUTION
How does the type of goods and services produced affect gdp and its measure of living standards
- GDP only looks at the amount of goods and services produced and not the type of goods and services produced for example if there was a large increase in the amount of capital goods produced this wo
Lid increase gdp but it wouldn’t increase living standards
What is GDP PER CAPITA and hwo is it calculated
Gdp per capita is a measure of the incomes of each person in the economy
It is calculated by total gdp/ population
What are some weaknesses of gdp per capita
- doesn’t take into account abroad incomes and remittances
