2.1.1 - Economic Growth

Question 1

Economic Growth

Answer 1

The rise in the value of GDP

Question 2

GDP

Answer 2

Measures the quantity of goods and services produced in the economy

Question 3

Difference between Real and Nominal GDP

Answer 3

Real GDP - GDP adjusted for inflation
Nominal GDP - Not adjusted for inflation

Question 4

Total GDP vs GDP Per Capita

Answer 4

Total GDP - The combined value of goods and services in the economy

GDP Per Capita - The total value of GDP divided by the population of the country. More useful in comparisons between different countries

Question 5

Volume vs Value of GDP

Answer 5

Volume of GDP - GDP adjusted for inflation

Value of GDP - The monetary value of GDP

Question 6

What are the measures of Economic Growth

Answer 6

• GDP
• GNI
• GNP
• PPP
• National Happiness

Question 7

GNI

Answer 7

Gross National Income (GNI) is the total amount of money earned by a nation’s people and businesses in a given period (usually a year) whether at home or abroad

Question 8

GNP

Answer 8

A measure of a country’s total economic output, including income generated by its residents, whether at home or abroad.

Question 9

PPP - Purchasing Power Parities

Answer 9

In simple terms, Purchasing Power Parity (PPP) is a theory that suggests the same goods and services should cost the same amount in different countries, once their currencies are exchanged. It essentially compares the value of different currencies by looking at what they can buy in terms of goods and services.

Question 10

Limitations of GDP in comparing living standards

Answer 10

• GDP fails to account for the distribution of income
• Hidden economies like the black market which means they are not accounted for.
• GDP doesn’t indicate the welfare and the happiness unlike the National happiness index