Economic performance

Question 1

What is GDP

Answer 1

Gross domestic product - market value of all final goods and services produced in a period of time (in the boarders)
- usually 1/4 of the year

Question 2

Nominal GDP

Answer 2

Current market price using the effet of time as a measurement (inflation)
PxQ
- without adjusting for inflation

Question 3

Real GDP

Answer 3

Actual quantity of goods and services produced valued at a constant price from the base year
- strips out inflation
- Clear comparison of actual growth in output

Question 4

How to work out Real GDP

Answer 4

Nominal GDP/ GDP deflator

Question 5

GDP per capita

Answer 5

Total GDP divided by countries population

Question 6

GDP per capita annual growth rate

Answer 6

100 x (GDP per capita yr 1 - GDP per capita yr2)/ GDP per capita yr 1

Question 7

Purchasing Power Parity (PPP)

Answer 7

Compares two similar basket of goods across countries
e.g Mcdonalds index

Question 8

Limitations of GDP

Answer 8

1. Ignores household production (no tranaction like childcare) - non market activity, undervalues groups
2. No underground economics activity (non legal transactions like drugs)
3. Misses - Happiness, community, Human rights
4. Doesn’t take into account economics growths sustainability
5. Includes bombs and weapons as inventory
6. Ignores environmental damage (increase production = pollution)

Question 9

Other measure of wellbeing

Answer 9

• Human development index
• Human development index - Inequality adjusted
• Gender Development Index
• Standard of living
• Happiess index

Question 10

What is Human development index?

Answer 10

3 essential elements for developement:
1. Lead a long + healthy life
2. Accquire knowledge
3. Access to resources for decent living

Question 11

What does the human development index use and how?

Answer 11

Life expectancy, Education and per capita income
- index scale of 0-1
- Overall HDI = Arithmetric average of 3 indicies

Question 12

Human development index - Inequality adjusted

Answer 12

Uses the same principles of HDI bt measure differs wit countries, some live longer, higher income

Question 13

Gender Development index

Answer 13

mean and women separately: life expectancy, average education, income differs

Question 14

How to work out GDI and interpretating

Answer 14

Female HDI/ Male HDI

if GDI is less than 1 HDI is higher for men

Question 15

Standard of living

Answer 15

Concepts put together: standard of living, consumption, wellbeing, life satisfaction, happiness …
- Uses various measure for better understanding

Question 16

How can countrises improve living standards?

Answer 16

• Need sustained periods of economic growth (GDP per capita)
• Average person in the world is 4.4x richer from 1980

Question 17

Happiness index

Answer 17

Measures persons happiness, wellbeing and quality of life
- uses surveys

Question 18

Long run economic growth result

Answer 18

Increase of GDP per capita of an economy at 1 time

Question 19

Factors driving long run economuc growth

Answer 19

• Increase labour productivity
• Capital accumulation
• Technological progress

Question 20

Why is GDP considered a measure of a country’s economic health

Answer 20

Indictates the size and performance of a country
- signals economic health and activity

Question 21

What can cause GDP to increase without improving living standards

Answer 21

Inflation
Military spending
Pollution
Higher equity (economic gain concentrated)