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9 Cards in this Set
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GDP |
Gross domestic product is the measure of the value of goods and services produced across all sectors of an economy over the course of a year |
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What is the different between actual economic growth and potential economic growth? |
Actual economic growth is an increase in GDP or real incomes. Potential economic growth is an increase in the productive capacity of an economy. |
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What are the three ways in which GDP be measured? Why can all these methods be used? |
Output measure: the value of goods and services domestically produced Expenditure: the value of goods and services purchased by firms and households Income: the value of income gained by domestic individuals and firms (in terms of wages and profit) as a direct result of the production of the outputs. In theory, each of these should give the same value |
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What isn't included in GDP and how frequently is good calculated? |
GDP does not include income received from abroad by domestic residents. GDP is calculated quarterly. |
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What is involved in the output measure? |
The ons manufacturing and service sector survey, which collects sales information from 10000 construction firms, 6000 manufacturing firms, 5000 retailers and 25000 service sector firms. Information about health, education and energy etc is also collected from government departments. |
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Why can GDP be said to show increased standard of living and why might this not be the case? |
A higher GDP is a sign that an economy is experiencing economic, so growth people are likely able to afford more goods and survices, suggesting the standard of living will be higher. However, this could be triggered by people working more hours, increased living costs such as mortgage repayments or an increase in the population, which would cause GDP to increase, but would actually mean people are worse off per capita. |
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What is the difference between real and nominal values? |
Real values have been adjusted to remove the effects of inflation. Nominal values are the values that your would see if they were unadjusted. |
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What is gnp? |
Gnp is the total market value of goods and services which are domestically produced, plus any income residents have received from abroad, minus any income which is claimed by non-domestic residents. |
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Why might GNP be lower, higher or similar to GDP? |
GNP may be much less than GDP if much of the income from a country's production flows to foreign people or firms. GNP may be much higher than GDP if a country has large amounts of stocks or bonds or firms or governments of other countries and receive income from them. Gnp and GDP will likely have similar values if the levels of inflow and outflow in a country are roughly equal. |
