Theme 2 2.1.1 Flashcards
GDP
Total value or national output of goods and services. Estimating the size of growth in an economy.
Economic Growth
- The sustained growth of real GDP over time.
- contributes to the rising average living standards
- long-run increases country’s productive capacity
Economic welfare
- broader measure of (social and economic) well-being
- measures might include the level of inequality and median incomes
GNI (Gross National Income)
- Measure wealth
- Calculates income (rather than output in GDP)
GNI= GDP + Net Primary Income + Net Secondary Income
Net Primary Income
Net: resultant money/ remaining value after a commonly understood deduction
Includes wages and salaries…as well as foreign investment such as interest or dividends (shareholders)
Net Secondary Income
Transfers of money btw countries. E.g. remittances
Nominal Data
- Gives monetary values for data — also known as money GDP.
- NOT ADJUSTED TO INFLATION
- expressed at current prices (today’s prices)
Nominal GDP in a given time period = Quantity of goods and services Produced + Current Prices
Real Data
- ADJUSTED TO INFLATION
- prices are held at the level of a chosen base year
- expressed at constant prices
Subjective Happiness
- Self-reported level of happiness with one-s life (mainly determined using questionnaires).
- Involves considering emotions rather than material well-being
Easterlin Paradox
- concerns wether we are happier and more contented with the improve of our real living standards
- rich people tend to be happier than poor people
- Richard Easterlin argued that life satisfaction does rise with the average incomes but only to a certain point
Happy Planet Index
Measure life expectancy, well-being, inequality of outcomes….
Purchasing Power Parity (PPP)
- items should cost the same in different countries
- measures how many units of one countries currency are needed to buy the same basket of goods and services in other countries.
Big Mac Index
Measures each currency against common standards
