Measures of Economic Performance

Question 1

Differnece between real and nominal GDP

Answer 1

real gdp strips out effetcs of inflation

nominal gdp accounts for inflation

Question 2

Define gross national income

Answer 2

the value of goods and servicies produced by a country over time plus net overseas interest payments and dividends

Question 3

Define gross national product

Answer 3

the value of goods and serrvicies over a period of time through labour or property supplied by citizens of a country both domestically and overseas

Question 4

making comparisons about growth

Answer 4

• over time
• between countries

Question 5

Define purchaisng power parities

Answer 5

an exchange rate of one currency for another which compares how much a typical basket of goods in the country costs to one in another country

Question 6

probelms with using gdp and a measure

Answer 6

• inaccuracies as there is a black market
• inequalities
• education

Question 7

real icnomes and subjective happiness link

Answer 7

• easterlin paradox - increases in rich ppls income wont make them happier
  happiness depends on people around us

social status

Question 8

forumula for indicies

Answer 8

new figure / base year x 100

Question 9

CPI method

Answer 9

ONS collect prices on 710 goods and services from 20,000 shops in 141 locations and online sites, price updated evrey month

average household spending worked out usuing living costs and food survey - 5500 families keep diary of what they spend

takes into acc how much is spent on eahc item then weighted basket of goods

limitation

difficult to make comparisons with histoiral data

does not take into aoccoutn pric of housing