measuring a nations well being

economics topics 1

macroeconomics

study of economics as a whole

subjective well being

way in which people evaluate own happiness

objective well being

measures quality of life and uses indicators; live expectancy, standard of living etc

circular flow diagram

shows equality of income and expenditure

leakages

come from tax, savings and imports (M)

injections

come from government purchases (G), exports (X) and investments (I)

gross domestic product

measure of income and expenditures of an economy

6 factors of gdp

1. valued at market prices

2. only value of final goods

3. goods and services

4. produced in said period

5. within a country

6. given time period

gross national product

total income earned by a nations permanent residents

modified final domestic demand

all expenditure by households on things like food, rent and travel

what’s not counted in GDP

items that never enter the market place eg drugs

gdp (y) sum

Y= C(consumption) +I+G(gov purchases) +NX ( net exports )

investment vs capital

investment is spending on capital

why total spending can rise year to year

1. economy may be producing a larger output of goods and services

2. goods and services could be selling at higher prices

what gdp can’t tell us

value of leisure, distribution of income, value of a clean environment