Measuring Economic Performance Flashcards
what are the four main economic indicators
- Growth
- Inflation
- Unemployment
- Balance of Payments
What are the two way output can be measured
Volume - quantity produced in a year
Value - Value of all things produced in a year
what is economic growth
rate of change of GDP
GDP
total value of the national output in a year
What is the difference between nominal and real GDP
Nominal - Not adjusted for inflation
Real - Without effect of inflation
What does the GDP per Capita indicate
Standard of living
Gross National Income
GDP plus net income from other assets owned abroad
Gross National Product
total output of citizens in a country regardless of whether they reside there
What is Purchasing Power Parity
real value of an amount of money in terms of what can actually be bought with it. Differs country to country due to stronger or weaker exchange rates.
Limitations of GDP in comparisons
- Doesn’t account for hidden economy
- Some Governments use more public spending to increase living standards.
- Doesn’t show distribution of income
- Other factors like damage to environment or working conditions
What is Happiness Economics
Measures subjective wellbeing in how satisfied people are with their lives.
Relationship between real income and subjective happiness
They both rise together but at a point happiness will cease to rise while income still rises, Easterlin paradox
What is the UK National Well-Being programme
Records statistics for personal wellbeing areas like health and relationships