Measures of Economic Performance

Question 1

What does GDP stand for and what does it mean

Answer 1

Gross Domestic Product- The total value of goods and services produced in a country within a year(or given time period)

Question 2

What is GDP per capita
(you can give the formula by itself)

Answer 2

Total GDP of country/population of country

Question 3

What is the difference between real and nominal GDP

Answer 3

Real GDP includes the effects of inflation whilst nominal GDP does not include the effects of inflation.

Question 4

What does GNI stand for and what does it mean

Answer 4

Gross National Income-The value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends.

Question 5

Define Purchasing Power Parities

Answer 5

An exchange rate of one currency for another which compares how much a typical basket of goods in the country costs compared to one in another country

Question 6

Problems with using Real GDP as a measurement of growth within a country

Answer 6

1.Inaccuracy of data:
-imperfect information
-existence of black markets
-errors in calculating inflation

2.Doesn’t show inequality within a country

3.Doesn’t account for living standards

4.Doesn’t account for quality of goods and services

5.Difficulties in comparing between different countries
-different currencies used