Growth Flashcards
What is the GDP formula
Income = output = expenditure
What can GDP be a measure of
Growth
Living standards
Evaluation points for using GDP as a measure of growth
Double counting
Informal activity
Errors given vast data collection
Evaluation points for using GDP as a measure of living standards
Negative externalities
Income inequality
Output produced
Other quality of life aspects
What is the GDP/Capita equation
GDP
—————
Population
Evaluation for GDP/Capita
Same as GDP
What is the GNI (per capita)
GNI=GDP+net factor income
What does GNI (per capita) show
Income earned by domestic workers/firms
Incomes earned by foreign workers/firms at home
What does Green GDP account for
Accounts for the environmental costs of production
What is the Green GDP equation
Green GDP=GDP-Environmental costs
Evaluation of Green GDP
Monetary value on environmental costs difficult
GDP could fall dramatically
Economic growth definition
Economic growth is an increase in real GDP in an economy in a year caused by an increase in AD or an increase in LRAS
What is short run growth also called
Actual growth
When does short run growth occur
An increase in AD
Using spare capacity to increase Real GDP
Causes of short run growth
Lowe interest rates
Lower income or corporation tax
Higher consumer or business confidence
Higher government spending
Weaker exchange rate
