4.5 GDP

Define nominal GDP

measurement of monetary value of goods & services produced within a country at current market values over a period of time

What does GDP stand for?

gross domestic product

What Makes Up GDP?
1.      C__ e__ (C): total s__ on goods & services by indiv. & h__ in economy e.g. food, clothing, holidays

2.      I__ e__ (I): c__ expenditure of firms used to ↑p__ e.g. machinery

consumption expenditure, spending, households, investment expenditure, capital, production

What Makes Up GDP?
3.      G__ e__ (G): total _ + I by govt e.g. infrastructure, new schools & hospitals, roads

4.      E__ e__ (X): value of all exports sold to foreign buyers

5.      I__ e__ (M): monetary values of payment on imports e.g. imported cars

govt expenditure, export earnings, import expenditure

GDP = C + I + G + (_ – _)

x - m

Economic Growth
>  ↑n__ output i.e. annual Δ% in GDP ;; ↑GDP = economic growth

>>   ↑q__/quality of factors of p__ = economic growth
>↑economic growth = ↑long-term productive capacity of economy

national, quantity, production

Causes of Economic Growth
1.      F__ endowments: quantity & q__ of country’s factor
of p__ e.g. NZ tourism & dairy

2.      L__ force: size, skill, mobility of workforce

factor, quality, production, labour

Causes of Economic Growth
3. L__ productivity: amt of g__ & services workers p__ in any period
4. I__ expenditure = ↑productive capacity

labour, goods, produced, investment

What does this show?

economic growth

Benefits of Economic Growth
1.      ↑goods & s__ s__ needs & wants

2.      ↑business o__ bc of ↑sales/profit

3.      ↑e__

4.      L__ & s__ inflation if growth matches demand

5.      ↑r__ for govt

6.      Overall ↑s__ of living

services satisfy, opportunities, employment, low, stable, revenue, standard

Drawbacks of Economic Growth
1.      ↑t__ = r__ workers = ↑un__

2.      Risk of i__

3.      Growth = unsustainable ↓r__

4.      ↑production = __ve externalities e.g. pollution

5.      Risk of ↑i__ if growth benefits not shared equally

tech, replaces, unemployment, inflation, resources, -ve, inequality

Define recession

economic decline w/ less goods & services produced

Recession leads to:
>   ↓i__; ↓living s__

income, standards