2.1 Economic Growth

Question 1

What is economic growth

Answer 1

the rate of change of output (of GDP)

Question 2

How does growth affect a country long term

Answer 2

It increases the productive potential of a country

Question 3

how is growth typically measured

Answer 3

in percentage change in real GDP per annum

Question 4

how is growth shown on a graph

Answer 4

outwards movement of the PPF

Question 5

What Is GDP

Answer 5

The total value of goods and services produced in a year within a country

Question 6

Why is GDP used

Answer 6

It is the standard measure of output for easy comparison between countries

Question 7

what is GDP an indicator for

Answer 7

the standard of living in a country

Question 8

what is total GDP

Answer 8

the overall GDP in a country

Question 9

what is gdp per capita

Answer 9

total GDP divided by the population of a country

Question 10

How Can GDP per capita grow

Answer 10

if national output grows faster than population over a time period so there are more G&S per person to enjoy

Question 11

what is real GDP

Answer 11

GDP accounted for inflation

Question 12

what is nominal GDP

Answer 12

The raw stats of GDP

Question 13

what can real values be described as

Answer 13

the volume of national income (so the size of the basket of goods)

Question 14

What are nominal values

Answer 14

the value of the national income (the monetary cost of the the goods in the basket)

Question 15

What is value equal to

Answer 15

Volume times current prices level

Question 16

what is national income equal to

Answer 16

A country’s total income adjusted for inflation

Question 17

what is volume equal to

Answer 17

national income adjusted for inflation

Question 18

how is volume expressed

Answer 18

index number or money terms

Question 19

what are the two other national income measures

Answer 19

GNI
GNP

Question 20

What is GNI

Answer 20

value of goods and series produced by a country over a period of time plus net overseas interest payments and dividends

Question 21

difference between GNI and GDP

Answer 21

GNI add to GDP what a country earns from overseas investments and subtracts what foreigners earn and sent back home

Question 22

why is GNI increasingly used over GDP

Answer 22

there has been significant growth in the size of remittances and aid

Question 23

what is GNP

Answer 23

value of goods and services over a period through labour or property supplied by citizens domestically and overseas

Question 24

How is GNP different to GDP

Answer 24

it is the value of all goods and services produced by citizens of a country whether or not they live in the country

Question 25

what does changing national income show

Answer 25

whether a country’s GDP has grown or shrunk over a period of time

Question 26

When is real GDP per capita useful

Answer 26

To Compare between different countries which have different populations and currencies with different rates of inflation

Question 27

what is PPP

Answer 27

an exchange rate that compares how much a typical basket of goods in one country would cost in the other

Question 28

what can PPP be used instead of

Answer 28

GDP for comparison

Question 29

why is PPP useful

Answer 29

when comparing countries, it takes into account the cost of living so is better at comparing living standards

Question 30

An example of a specific prince index

Answer 30

the Big Mac index that compares the costs of Big Macs around the world

Question 31

how does PPP narrow the gap that GDP suggests

Answer 31

The gap is smaller as lower GDP countries also have lower cost of living

Question 32

example of how PPP allows people to live in poor countries

Answer 32

It costs only £2 a day in Kenya to survive on

Question 33

problems of using GDP to compare standard of living

Answer 33

inaccuray of data Inequality Quality of G&S Comparing different currencies Spending

Question 34

How does inaccuracy of data cause GDP inaccuracy

Answer 34

Collection and calculations may be invalid Hidden or black markets No domestic services included(doesn’t measure unpaid labour like washing up etc) Methods to calculate will change so be hard to compare You have to remove transfers without increase in output

Question 35

how does inequality cause GDP inaccuracy

Answer 35

income may increase in only 1 group of people so only a few people may increase Living Standards (LS)

Question 36

how does quality on goods and services cause GDP inaccuracy

Answer 36

quality may be higher today than 50 years ago but that isn’t reflected in the real price of these G&S, so standard of living has increased more than is shown as better tech

Question 37

How does comparing different currencies affect GDP inaccuracy

Answer 37

most currencies are converted to USD but PPP should be taken into account the differences in Cost of living

Question 38

How does spending affect GDP inaccuracy

Answer 38

some spending like defence does not increase standard of living but will increase GDP, it makes comparisons between different countries harder

Question 39

example of defence increasing GDP

Answer 39

in WW2 the GDP was higher than in the 1930s where lots of money went to the military but standard of living was not higher during the war.

Question 40

What Does the UN happiness report include

Answer 40

real GDP per capita, health, life expectancy, having someone to count on, perceived freedom to make life choices, freedom from corruption and generosity

Question 41

what is the UK’s own report of how lives are improving

Answer 41

Measuring National Wellbeing

Question 42

What did the UK’s Measuring National Wellbeing report find

Answer 42

self reported health, relationship status, employment status are the biggest factos