3. GDP and Growth

What is GDP per capita?

The economic output of a country per person.

How do we calculate GDP per capita?

GDP/population

What is real GDP?

A measure of all value of goods and services produced in an economy adjusted for inflation.

What is nominal GDP?

A measure of all value of goods and services produced in an economy not considering inflation.

State the benefits of GDP.

1. Growth can indicate the health of the economy.

2. Can tell us about living standards.

3. Can be calculated and compared for all countries.

4. Can help policymakers make informed decisions.

5. Can be adjusted for inflation.

What does PPP stand for?

Purchasing Power Parity

What does PPP measure and compare?

The price of specific goods in different countries

What is the purpose of PPP?

To compare the absolute purchasing power of different countries' currencies

Define exchange rate.

The rate at which the currency of one country would have to be converted into that of another to purchase the same amount of goods and services.

State six limitations of GDP.

1. Doesn't account for income from the black market.

2. Doesn't account for non market activities.

3. Poor at recognising environmental costs

4. Does not take into account happiness and well-being

5. Doesn't measure the sustainability of growth.

6. Doesn't show where money is being spent.

State the factors which may be used to measure wellbeing and living standards.

1. Access to healthcare and public services.

2. Income and income distribution

3. Employment

4. Infrastructure

5. Housing

6. Environment

What is the UK wellbeing survey?

A survey asking 100,000 people how to rate questions on a scale of 1-10 to measure wellbeing.

What are the 4 questions in the UK wellbeing survey?

1. How satisfied are you with your life?

2. To what extent do you feel the things you do in your life are worthwhile?

3. How happy did you feel yesterday?

4. How anxious did you feel yesterday?