Measures of growth GDP GNI & green GDP

• Why are national income statistics useful for a government?

  They provide a report card for governments to evaluate economic performance and growth.
• What is the most commonly used measure of economic growth?

  GDP or real GDP adjusted for inflation.
• What are the three methods to calculate GDP?

  The income method, the output method, and the expenditure method.
• What is the definition of GDP?

  The value of all final goods and services produced in an economy in a year.
• How does GDP relate to living standards?

  If GDP increases, it generally indicates that incomes in the economy are rising, suggesting improved living standards.
• What is a key issue with using GDP as a measure of growth?

  There is a risk of double counting, especially with the output method.
• What is double counting in the context of GDP?

  Double counting occurs when the value of output is included more than once in GDP calculations.
• What types of informal activities are not included in GDP calculations?

  Black market activities, DIY work, and subsistence agriculture are not included.
• Why is data collection for GDP challenging?

  It requires a vast amount of information from various sources and needs to be collected quickly.
• What negative externalities are not accounted for in GDP calculations?

  Costs of air pollution, resource depletion, and loss of biodiversity are not included.
• How does GDP fail to address income inequality?

  GDP does not provide information about the distribution of income within the economy.
• What is GDP per capita?

  GDP per capita is real GDP divided by the population, providing an average measure of individual incomes.
• What is a limitation of GDP per capita?

  It shares the same issues as GDP, including informal activities and negative externalities.
• What are remittances?

  Remittances are incomes sent back to a home country by domestic workers who are employed abroad.
• How do remittances affect GDP calculations?

  Remittances are not included in GDP or GDP per capita, even though they improve living standards.
• What is foreign direct investment (FDI)?

  FDI is when foreign firms operate businesses in a home country, contributing to its GDP.
• How can FDI distort GDP figures?

  FDI can inflate GDP figures because much of the income generated may be repatriated to the foreign firm's home country.
• What is Gross National Income (GNI)?

  GNI is the total income generated by a country's factors of production, regardless of their location.
• How is GNI calculated?

  GNI is calculated as GDP plus net factor income from abroad.
• What is net factor income?

  Net factor income is the income earned by domestic workers and firms abroad minus the income earned by foreign workers and firms at home.
• Why is GNI considered a better measure of living standards in developing countries?

  GNI accounts for remittances and excludes income from foreign direct investment, providing a clearer picture of living standards.
• What is a major flaw of GNI?

  GNI still does not account for environmental costs of production, which can harm living standards.
• What is Green GDP?

  Green GDP is a measure of GDP that accounts for the environmental costs of production.
• How is Green GDP calculated?

  Green GDP is calculated as GDP minus the environmental costs of production.
• What is a challenge in using Green GDP?

  Putting a monetary value on environmental costs is difficult and subjective.
• Why might Green GDP be politically sensitive?

  Using Green GDP can significantly lower GDP figures, which may be politically damaging.
• What is the Human Development Index (HDI)?

  HDI is a measure that includes income, education, and healthcare to assess living standards.
• How is HDI used alongside GDP?

  HDI provides a more holistic view of living standards by including education and healthcare performance.