measuring national income

Question 1

what is Economic Growth?

Answer 1

a measure of an increase in real GDP

Question 2

what is GDP?

Answer 2

the total value of goods and services produced in country in 1 year, or the total amount spent or the total amount earned.

Question 3

what is the difference between real GDP and nominal GDP?

Answer 3

real GDP is GDP adjusted for inflation whereas nominal GDP uses current prices

Question 4

what is a recession?

Answer 4

A recession is a decline in real national income sustained for at least two consecutive quarters.

Question 5

what is standard of living as a measurement?

Answer 5

measures quality of life. can include physical assets and consumption and less easily measured variables like happiness, lack of pollution..

Question 6

what is GDP per capita?

Answer 6

total GDP divided by the population

Question 7

what is quality of life?

Answer 7

measure of living standards that take into account more than just income (or GDP)

Question 8

describe the distinction between value and volume

Answer 8

an increase in the volume of output does not always mean that there is an increase in the value of output. volume of output measures the number of items produced, but if these are falling in price (perhaps because lots of countries are producing the same thing) then value might fall even when volume rises

Question 9

what is purchasing power parities (PPP)?

Answer 9

PPP measures how many units of one country’s currency is needed to buy the exact same basket of goods as can be bought with a given amount of another country’s currency

Question 10

what is gross national income/ GNI?

Answer 10

measures income received by a country both domestically (gross domestic product) and net incomes from overseas

Question 11

what do GNI and GNP measure?

Answer 11

measure output from the workers and companies of a particular nation, regardless of the country the income earners are based in.

Question 12

what is national happiness?

Answer 12

measure of national well-being

Question 13

what is subjective happiness?

Answer 13

how people feel about themselves.

Question 14

describe the distinction between total GDP and GDP per capita

Answer 14

Total GDP represents the overall GDP for the country whilst GDP per capita is the total GDP divided by the number of people in a country.

Question 15

how do you work out nominal GDP?

Answer 15

times the price by the quantity for each year.

Question 16

how do you work out GDP per Capita?

Answer 16

GDP over population, measures real income per head of capita.

Question 17

why is using PPP useful for comparing GDP?

Answer 17

provide an alternative to using exchange rates for comparison of GDP.
These are useful when comparing countries as it takes into account the cost of living (how much has to be spent to maintain living standards), and so will help us better compare living standards.

Question 18

what is the relationship between real incomes and subjective happiness?

Answer 18

One key finding of psychological research is that happiness and income are positively related at low incomes. (if you are poor and your income increases,
you will be happier, but higher levels of income aren’t associated with increases in happiness).

Income is linked to social status and higher
social status tends to make us happier

Question 19

what is the UK national wellbeing measure?

Answer 19

In 2010, the UK Prime Minister launched the Measuring National Wellbeing report to measure how lives are improving.
They ask 4 key questions about life satisfaction, anxiety, happiness and worthwhileness, where people answer on a scale of 0 “not at all” to 10 “completely”.
The report is now updated on a quarterly basis, rather than annually

Question 20

what is national output?

Answer 20

national income measures the monetary value of the flow of output of goods and services produced in an economy over a period of time.