economic growth week 1 Flashcards
(14 cards)
What are the effects of economic growth?
An increase in employment, higher incomes, and a better standard of living.
What are the drivers of economic growth?
- Technological progress
- Productivity
- Capital accumulation
- Population growth
What is aggregate economic activity?
The behavior of economic activity over time, measured by synthetic measures like GDP.
What is GDP?
Gross Domestic Product, the market value of final goods and services produced in an economy in a given year.
How is GDP computed?
Using PPP-Adjusted Real GDP per capita and fixing prices at a given baseline year.
What does GDP per capita measure?
The average level of income for a resident of a country.
What is a key message about economic growth over the very long run?
Sustained increases in standards of living are a recent phenomenon.
Economic growth emerges in different places at different times
True or False: GDP is a direct measure of wellbeing.
False
Why do people care about GDP?
It is easier to compare across countries than any other measure of wellbeing and measures a country’s productive capacity (crucial factor for improvement in health and other dimensions)
- it is objective and has consistent definition
- has a natural metric (money
- strongly positively correlated with several direct measures of wellbeing
What are some limitations of GDP as a measure?
- It does not measure wellbeing directly
- It might associate with negative aspects like unemployment; climate change, inequality
What are the key questions of economic growth?
- What drives sustained economic growth?
- What explains differences in economic performance across countries?
- Are poorer countries going to catch up?
- Which policies can promote growth?
What is the definition of aggregate output?
The sum of the values of all FINAL goods produced in the economy - not the intermediate ones
What is an intermediate good?
A product used in the production of final goods.
What happens to GDP when firms merge?
GDP remains the same because it should not depend on whether firms decide to merge.
