Measures Of Economic Performance - Economic Growth

Question 1

What objectives might a government have for an economy

Answer 1

1. Economic growth
2. To reduce unemployment
3. To balance the trade position
4. To reduce government debt

Question 2

GDP is the total _______ of goods and services produced in an economy (calculated ___________ and ________)

Answer 2

Value

Calculated quarterly and annually

Question 3

What 2 ways can statisticians measure GDP

Answer 3

By adding up all the ‘incomes’ in the economy

By adding up all the ‘expenditures’ in the economy

Question 4

Examples of ‘incomes’ in the economy

Answer 4

Wages, interests, profits, rents

Question 5

Examples of ‘expenditures’ in the economy

Answer 5

Consumption, investment, government spending, net exports’

Question 6

Economic growth is measured by the rate of ________ of GDP over time

Answer 6

Change

Question 7

What is the difference between nominal and real GDP

Answer 7

Real GDP figures are adjusted to account for the rate of change of prices

Question 8

When calculating real GDP, _________ numbers are often used for convenience

Answer 8

Index

Question 9

How to calculate real GDP in the exam

Answer 9

Nominal GDP divided by Price index

Question 10

What is the volume of GDP

Answer 10

Real GDP

Question 11

What is the value of GDP

Answer 11

Nominal GDP

Question 12

What is the difference between GDP and GNI

Answer 12

GNI includes net property income from abroad

GNI = GDP + Net property income from abroad

Question 13

How to calculate index number

Answer 13

Current value / base year value x 100

Question 14

Asset: Firm
Income: _________

Answer 14

Profit

Question 15

Asset: Loans
Income: _________

Answer 15

Interest

Question 16

Asset: Shares
Profit: _________

Answer 16

Dividend (share of profit)

Question 17

Limitations of GDP:

Answer 17

Doesn’t account for inequality
Doesn’t account for population increase
Doesn’t account for pressure on public services, or environmental damage
Doesn’t include where econonmic growth occurs - in areas with negative externalities (polluting industires) or positive areas (health, education)