Edexcel A-Level Economics: Economic Growth

Vocabulary flashcards covering definitions, formulas, and core concepts from the Edexcel A-Level Economics Theme 2 mind map on economic growth.

Economic Growth

A rise in the real value of goods and services an economy produces over time, measured as the annual percentage change in real GDP.

Growth Rate Formula

The formula used to calculate the percentage change in economic output: $\text{Growth Rate} = \frac{\text{GDP}_2 - \text{GDP}_1}{\text{GDP}_1} \times 100$.

Gross Domestic Product (GDP)

The total value of output produced within a country's borders in a given period.

Expenditure Method of GDP

A method to calculate GDP by adding consumption, investment, government spending, and net exports: $\text{GDP} = C + I + G + (X - M)$.

Income Method of GDP

A method to calculate GDP by summing all factor incomes: $\text{GDP} = \text{wages} + \text{profits} + \text{rent} + \text{interest}$.

Output Method of GDP

A method to calculate GDP based on the value added across each stage of production.

Gross National Income (GNI)

A measure broader than GDP that includes total income earned by a country's residents and businesses both domestically and abroad, calculated as $\text{GNI} = \text{GDP} + \text{primary income from abroad} + \text{secondary income from abroad}$.

Primary Income

Wages, profits, dividends, or interest earned overseas.

Secondary Income

Transfers between countries with nothing given back in return, such as aid or remittances.

Real GDP

GDP adjusted for inflation to reflect changes in the quantity of goods and services produced, calculated as $\text{Real GDP} = \frac{\text{Nominal}}{\text{Price Index}} \times 100$.

Nominal GDP

GDP that does not adjust for inflation and is measured using current market prices.

Total GDP

The added monetary value of all goods and services produced within a country's borders over a period of time.

Per Capita GDP

Measures average economic output per person within a country, calculated as $\frac{\text{Total GDP}}{\text{population}}$.

Value GDP

The total monetary value of all goods and services produced in a country over a period of time at current prices.

Volume GDP

GDP adjusted for price changes to show the real quantity of goods and services produced.

Purchasing Power Parity (PPP)

A measure of how much of a country's currency is needed to buy the same basket of goods as a given amount of another currency, adjusting GDP and GNI for cost-of-living differences.

Positive Growth

A percentage rise in real GDP or GNI compared to the previous period.

Negative Growth

A percentage fall in real GDP or GNI compared to the previous period.

Recession

Two consecutive quarters of negative economic growth.

Subjective Happiness

Self-reported wellbeing measured via questionnaires focused on emotion rather than material wealth.

Standard of Living

A measure of economic welfare and wellbeing.