1.1 Economic Growth Flashcards
(16 cards)
What is GDP?
Total value of national output of goods and services in a given period
Ways of measuring GDP?
1) Expenditure (C+I+G+X-m)
2) Factor incomes
3) Value of Output (value +)
What is economic growth?
Long-run increase in a country’s productive capacity
What is nominal GDP?
Value of national output at current prices
What is real GDP?
Takes inflation into account at constant prices
What is GNI?
GDP + net property income from overseas
What is Purchasing Power Parity?
Measures how many units of one currency is needed to buy the same basket of goods as can be bought with another currency
What is the Big Mac Index?
Used for PPP to compare US value to foreign values of a Big Mac
Benefits of using real GDP to measure changes in living standards?
1) Easy to compare over time
2) Easy to compare between countries
3) Correlates with HDI
Drawbacks of using GDP to measure changes in living standards?
1) No shadow economy
2) Doesn’t take into account inequalities
(NE: £23,000, London: £57,000)
3) Can be inaccurate
What is economic welfare?
Broader measure of well-being with both social & economic factors considered
How to measure economic well-being?
1) Real GDP per capita
2) Median household income
3) Inequalities
What is subjective well-being?
A person’s effective evaluation of their life usually done through surveys
Countries with well-being policy?
1) New Zealand first well-being budget
2) Sweden 6 hour workdays
Info about Gross National Happiness?
- Bhutan aims to measure progress through GNH
- Environmental conservation
- Limit tourists to preserve culture
What is the Easterlin Paradox?
Quality of life rises with average incomes only up to a certain point where marginal happiness gain is 0
