2.1.1 economic growth

Question 1

gross domestic product (GDP) (def.)

Answer 1

the total value of goods and services produced in an economy in a given time period

Question 2

how can GDP be measured?

Answer 2

expenditure approach - adds up the value of all the expenditure in the economy

income approach - adds up the rewards for the factors of production used

Question 3

nominal GDP (def.)

Answer 3

the actual value of the goods and services produced in an economy - there has been NO ADJUSTMENT FOR INFLATION

Question 4

real GDP (def.)

Answer 4

the value of all goods and services produced in an economy - ADJUSTED FOR INFLATION

Question 5

GDP per capital formula

Answer 5

GDP per capita = GDP / population size

Question 6

gross national income (GNI) (def.)

Answer 6

equivalent to GDP, but counting the output produced by citizens of an economy across the world

Question 7

gross national income formula

Answer 7

GNI = income earned by citizens operating outside the county + the GDP

Question 8

gross national product (GNP) (def.)

Answer 8

the value of the output produced by the citizens/firms of an economy either domestically or abroad

Question 9

gross national product formula

Answer 9

GNP = GDP + income from abroad - income sent by non-residents to their home countries

Question 10

purchasing power parity (PPP) (def.)

Answer 10

an economic theory

used to adjust GDP to account for different living standards across countries

Question 11

dis. of using GDP for comparisons

Answer 11

lack of information provided on inequality - does not take it into account

quality of goods and services

does not include voluntary/unpaid work
differences in hours worked

environment factors