Test 1

Question 1

What’s GDP per capita?

Answer 1

GDP per capita measures the average economic output per person in a country.

Question 2

What’s the formula for GDP per capita?

Answer 2

Total GDP / Population

Question 3

What are the pros of GDP per capita?

Answer 3

Can measure the average standard of living in an economy.

Allows for comparisons of economics performance between countries with different populations.

Question 4

What’s GDP?

Answer 4

The monetary value of all goods and services produced in an economy in a year. It counts the value of output produced within the geographical boundaries of a country.

Question 5

What’s expenditure?

Answer 5

Aggregate demand

Question 6

What are factor incomes?

Answer 6

Incomes from wages and salaries

Profits of private and public sector businesses

Rental income from ownership of land

Question 7

What’s the value of output?

Answer 7

Value added from each of the main sectors.

Question 8

What’s GNI?

Answer 8

An alternative to GDP as a measure of wealth. It measures income instead of output.

Question 9

What’s the formula for GNI?

Answer 9

GDP + Net Primary Income + Net Secondary Income

Question 10

What’s Net Primary Income?

Answer 10

All income earned abroad and earnings from foreign investments.

Question 11

What’s Net Secondary Income?

Answer 11

Transfers of money between countries.

Question 12

What’s the bassline measure of living standards?

Answer 12

RNI per capita

Question 13

What’s a purchasing power parity?

Answer 13

Measures how many units of one country’s currency are needed to buy exactly the same basket of goods and services as another currency.

Question 14

What’s disposable income?

Answer 14

The amount of money households have available for spending and saving after direct taxes.

Question 15

What are the cons of income per capita?

Answer 15

Ignores the distribution of income

Official data on incomes can be inaccurate

Rural vs Urban variations in per capita income

Changes in length of working hours, job conditions and security

Question 16

What are the cons of GDP?

Answer 16

Shadow Economy

Double counting

Public sector

Unreliable Statistics

Question 17

What’s economic well-being?

Answer 17

Refers to the overall quality of life and material prosperity enjoyed by households and individuals.

Question 18

What’s subjective hapiness?

Answer 18

Refers to self-reported levels of happiness with one’s life.

Question 19

How does the HDI measure economic development?

Answer 19

Life expectancy at birth

Years of schooling

Real GNI per capita

Purchasing Power Parity

Question 20

What are the pros of HDI?

Answer 20

Accounts for well-being

Uses fairly reliable data for comparison

Accounts for health and education

Can identify successful government policies

Question 21

What are the cons of HDI?

Answer 21

Doesn’t account for many qualitative factors like political freedom.

Doesn’t account for income inequality.

Doesn’t look at poverty or deprivation

May be outdated

Question 22

What’s the Easterlin Paradox?

Answer 22

The Easterlin Paradox refers to the belief that life satisfaction rises with incomes until a certain point, where there’s diminishing returns of happiness.

Question 23

What are the evaluations of the Easterlin Paradox?

Answer 23

There’s a definite connection between GDP and happiness

Rich countries have higher levels of social cohesion, social trust and more stable political systems, which lead to happiness.