33523289
Description
Flashcards by Dani Young, updated more than 1 year ago
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Created by Dani Young
over 2 years ago
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| Question | Answer |
| Define 'GDP' | 'Gross Domestic Product'-measurement of the value of all goods and services within a country produced within a year. |
| How to calculate GDP | Add up the total spending or add up the total incomes within the economy |
| GDP is comprised of | C+I+G+(X-M) |
| Define 'Nominal' GDP | The current value of all goods and services produced within a year, in current year dollars. |
| Define 'Real' GDP | Real GDP is Nominal GDP adjusted for inflation (fluctuations in price level) - Indicating if production has increased. |
| How to calculate Real GDP | Nominal GDP _____________ x 1,000 Price Index |
| What is the difference between Nominal and Real GDP | If the price levels increase, Nominal GDP will also increase, even if production remains the same. Therefore Nominal GDP is not an accurate measurement of production and economic growth. |
| What are the limitations of using Real or Nominal GDP as measurements of economic growth | * Does not show what goods are being produced, health, education or weapons. * How wealth is distributed, small proportion of population holds greatest proportion of wealth. * How great illegal income and production of goods and services contributes to the economy. |
| Define 'Productive Capacity' | Indicates whether a country is able to increase the production of goods and services so real production and incomes can increase. |
| Define 'Net Social Welfare' | Measurement of non-economic and economic factors that contribute to living standards, i.e environment, access to public goods and services, traffic congestion. |
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