econ growth 2.1

Economic growth How measured

Rate of change in output, measured using percentage change in real gdp

Distinguish between real and nominal

Real-strips out affect of inflation

Nominal-does not

Distinguish between value and volume

Volume- gdp adjusted for inflation

Value- monetary value of gdp at prices of day

Difference of gni and gdp

GDP- total value of goods and services

Gni- total value plus net overseas payments, includes housing costs

Benefits of using gdp to measure living standards

gdp reflects the total value of gods and services, when gd is growing, indicates the economy is doing well

Higher average income, means better employment and economic growth, and higher living standards

Allows to create useful comparisons with other countries

Limitations of using GDP to measure living standards

ignores income inequality-high gdp might only benefit small segment , while many may live in poverty

Dos not take into account quality of life- health, education, political freedom

Ignores non market ctivities- household work, volunteering

Ppp

Allows to make comparisons of gdp levels and living standards

How to measure happiness

Measure through the office national statistics- asks four personal wellbeing questions in survey, through answers they track information about you and how it effects wellbeing e.g. health, income, gender

Publish annual personal welbeing

Government then- identify groups with lower wellbeing, inform policy decisions