2 - Measures Of Performance

Question 1

GDP

Answer 1

Measures value of real output of the economy over a period of time

Question 2

Nominal GDP

Answer 2

The monetary value of all goods and services produced in economy

Question 3

Real GDP

Answer 3

Nominal GDP adjusted for inflation

Question 4

GDP per capita

Answer 4

National income per person

Question 5

GNP

Answer 5

GDP + net property income from abroad

Question 6

GNI

Answer 6

GDP + net income from abroad of compensation of employees and property income

Question 7

PPP

Answer 7

Used when assessing relative living standards between countries
- calculated by comparing basket of goods and services in different countries
- measures total amount of goods and services that a single unit of one country’s currency can buy in another county

Question 8

Standard of living

Answer 8

Measure of economic welfare and wellbeing

Question 9

What factors affect standard of living?

Answer 9

• access to healthcare
• access to education
• quality of job and housing

Question 10

Limitations of using GDP to compare living standards

Answer 10

Doesn’t take into account:
- distribution of income
- black market
- environment
- demerit goods

Data not always accurate:
- hard to collect and calculate