L15 - GNP and Prices

Who does GNP include or exclude

Includes citizens

Excludes foreigners

Consumer price index

Keeps track of price changes. Base year is when CPI = 1

CSO

Calculates an average basket of goods and services

Deflate

Adjusting for change on prices (from nominal to real)

Limitations of GDP and GNP

Not great measures of well being

Only measures paid economic activity

How to value output of public sector

No account of externalities or leisure

Includes money spent on bads, eg security

UN Human Development Index

Health, education, income

Measured from 0-1

Subjective well being

Involves asking direct question to people to rate their happiness on a scale

Ways to measure welfare

Economic output (GDP, GNP)

Welfare (UN HDI)

SWB

Misery index (unemployment + inflation)