Measuring Economic Performance Flashcards
What does growth and unemployment give an indication of?
Standards of living, but not full picture
What does economic development show?
Level of social and human welfare/quality of life, multiple indicators needed not just growth, inflation and unemployment
Human development index (HDI)
UN measure for social and economic development
Indicates Health, Education, Standards of Living
How is HDI used?
Measures changes in country’s development
Compare country’s development
Ranked or given index (>0.8 high, 0.8 - 0.5 medium, <0.5 low)
What are the criticisms of HDI?
Long life expectancy is not same as high quality life
Years in school doesn’t measure quality
Doesn’t measure extent of inequality
GNI can give inaccurate comparisons (hidden economy)
What are the 2 types of poverty measures?
Relative: compared to other incomes in country
Absolute: Can’t afford basics
What does GDP measure?
Change in national output (volume or value) over time
What does Higher GDP Per Capita (GDP divided by population) indicate (generally)?
Higher standards of living
What are the limitations of GDP?
Doesn’t take into account government spending (benefits)
Doesn’t show income inequality, only average is taken
Countries have different spending: cold weather
GDP only shows economic performance
What is GNI?
Gross National Income, GDP + Net income (earned from abroad)
What is Purchasing Power Parity?
Real value of money by what you can purchase with it, should adjust GDP for PPP (more accurate)
What do index numbers show?
Percentage changes, compared to a base year
What does the GINI coefficient show?
Measure inequality in income distribution, Lorenz curve shows proportion of population at an income, to calculate it is the space between Lorenz curve and line of perfect equality
