macroeconomics 2.1.1 Flashcards
(11 cards)
Economic Growth = The increase in a country’s …
What is Economic Growth?
Economic growth refers to the increase in a country’s Real GDP over time.
What is the difference between Real and Nominal GDP?
Nominal GDP is not adjusted for inflation and represents current market prices; whereas, Real GDP is adjusted for inflation and reflects the changes in the quantity of goods and services produced.
What is the equation to measure economic growth?
Economic Growth =
((final GDP - Initial GDP)
/ initial GDP )x100
what is the difference between total and per capita?
Total represents the aggregate sum of a given variable over a given population or area. Per Capita represents the average amount of a value per person.
What is the difference between value and volume?
Value = the monetary worth of the goods and services.
Volume = The total quantity produced of goods and services.
What is GNI?
Gross National Income includes the total income earned by a country’s residents and businesses abroad and domestically. It is broader than GDP as it includes overseas investments and remittances.
What is the use of cross-country comparisons?
It helps reveal relative economic performance and can highlight factors relating to economic growth as well as finding disparities.
What is the use of long term cross country comparisons?
Over time it will help to reveal and identify economic patterns and trends. Also it allows us to identify periods of economic recession, stagnation and expansion.
What are Purchasing Power Parities?
PPP’s are exchange rates that equalize the purchasing power of different currencies for a common basket of goods.
What are the limitations of using GDP?
- Unbalanced distribution of wealth means that although GDP per Capita may be high, there still may be poverty and poor national living standards.
2.GDP ignores all non-market activities and; therefore, misses out on a lot of activity (such as the shadow economy). - GDP does not focus on quality of life - such as education, healthcare and overall wellbeing.
What is the link between income and happiness?
Originally, as income increases, so does happiness ; however, as income continues to increase, the relationship between income and happiness begins to diminish.
