Standard of Living and Macroeconomic Indicators Flashcards
What is economic growth?
It refers to the growth in the quantity or output of goods and services produced in an economy.
What is national output equal to?
National output = National income = National expenditure
What is national income?
It is the monetary value of the final output of goods and services produced in an economy.
What is gross domestic product (GDP)?
It is the total value of final output produced within the geographical boundary of the country, regardless of the ownership of FOP, over one year and before the adjustment for depreciation at base year prices.
What are some examples of factor incomes?
Wages, interest profit and rent earned by foreign residents and remitted abroad, as well as incomes earned by domestic residents coming from abroad.
What is gross national income (GNI)?
It refers to the GDP plus factor incomes earned by residents overseas minus factor incomes earned by non-residents in the domestic economy.
What is the difference between nominal GDP and real GDP?
Nominal GDP is calculated with current year prices, whereas real GDP measures goods and services produced adjusted for the effects of inflation, calculated with base year prices.
What is the standard of living?
It refers to the level of social and economic well-being, or the average quantity of life of population which includes the material and non-material aspects of life.
What are the material aspects of standard of living?
They include the quality and quantity of goods and services available for consumption.
How to know whether to use standard of living over space or time?
SOL over space uses real GDP in US$PPP while SOL over time uses real GDP.
What are the non-material aspects of standard of living?
They include the quality of the environment one resides in i.e the number of working hours, leisure hours, quality of physical environment, life expectance etc.
What are the limitations of using national income statistics to compare standard of living OVER SPACE?
- Differences in accuracy and reliability of statistical data
- Differences in income distribution
- Differences in size of underground economy
What are the limitations of using national income statistics to compare standard of living OVER TIME?
- Change in distribution of income is not reflected in national income figures
- Change in quality and composition of products
- Change in amount of leisure time
- Non-market transactions
- Unrecorded and undeclared items
- Change in social costs unaccounted for in national income statistics