GDP: Measuring Total Production, Income and Economic Growth Flashcards
how is GDP measured?
- measure value oppose to quantity
- only includes goods produced that year
- resale don’t count
- intermediate good or inputs don’t count `
approaches to measuring GDP by ABS.
Income
expenditure
prodcution
the income approach to GDP
the sum of all income- wages, rent, profits, interest
production approach to GDP
production G/S - Cost of producing
the expenditure approach to GDP
sum total C, I, G, NX
Components of GDP
consumption, government spending, investment, net exports
4 shortcomings of GDP
- doesn’t include the impact of crime
- leisure activities
- quality of education and welfare
- Pollution and the environment
limitation of GDP
- underground economy; illegal
- household production; gardening
Net domestic product
measured by calculating GDP then minus depreciation on capital equipment. Tell you how to stop GDP decrease
Gross national income
income generated outside of Australia by Australian firms and individuals minus income generated in Australia by foreigners and foreign firms.
Real GDP
accounts for inflation and uses previous year prices
shows changes in output only
Nominal
doesn’t account for GDP uses current year prices.
GDP deflator
measure price level= nominal/ real * 100
Factors determining labour productivity
technology
capital
human capital
pro of economic growth
reduced poverty, better health and education
