Measuring GDP and Economic Growth

Question 1

What is GDP - market value count prod time

Answer 1

1) add up total prod market value (P*Q)
2) Final good (use for, car part)
3) produced wtihin country
4) Given time period

Question 2

Circular flow of expenditure and income

Answer 2

1) Factor markets
2) Household
3) Goods markets (Go exp, rest of world)
4) Firms

Question 3

GDP = Expenditure = Income

Answer 3

• Income = green exp = income

- Y = C + i + g + x -m

Question 4

Nominal GDP and real (ref year) GDP calculating

Answer 4

1) calc nom Q*P of that year

2) Calc real Q*P of base year

Question 5

Uses of GDP

Answer 5

• potential GDP (when all econ labour fully employed)
• Real GDP (calculated)
• Lucas wedge ( dif potential)
  1) Expansion - peak
  2) Recession - Trough

Question 6

Limitations of real GDP- factors influences standard of living and not involved on GDP

Answer 6

1) Household production (replace lightblub - underestimate total prod)
2) Underground econ activity (acoid tax)
3) Leisure time (off work)
4) Environmental quality (care rich countries)