Economic growth- Difficulties In Interpreting Changes

Question 0

Informal economy

Answer 0

Cash in hand means it is unrecorded activity in the economy. Unemployment, inflation and real GDP figures are incorrect.
Reduces the revenue for the Government- not true reflection=issues

Question 1

Population increase

Answer 1

If there or an increase in real GDP, economic growth me dvd go be accounted for as there is the possibility of it being a decrease.

By using real GDP per capita this solves the problem and gets the right figure

Question 2

Living Standards

Answer 2

If a rise in real GDP is brought by an increase in capital- takes a long time for the effect to improve. It could also n
be due to a rise in policing, rather than production

Question 3

Happiness

Answer 3

People do not get happier as living standards improve. Automatic adjustment is made and becomes expected. Happiness is based on the income and wellbeing of others, so a uniform change does not improve people’s attitude