Economic growth

• What is economic growth?

  An increase in real GDP
• What is real GDP?

  GDP that has taken inflation into account
• What is nominal GDP?

  GDP given in current prices, without being adjusted for inflation
• What is Gross Domestic Product (GDP)?

  The total amount of goods and services produced in a country in a year
• How is GDP per capita calculated?

  By dividing a country's GDP by their population
• What is a recession?

  A period of economic decline where the economy suffers two consecutive quarters of negative economic growth
• What does the volume of output measure?

  The number of goods produced
• What does the value of output measure?

  The number of goods produced multiplied by the price at which they are sold
• What does Gross National Income (GNI) measure?

  The income recieved by a country through both GDP and net incomes from overseas
• What is Purchasing Power Parity (PPP)?

  A measure of the price of specific goods in different countries used to compare the strength of countries currencies
• What is the Purchasing Power Parity (PPP) exchange rate?

  The rate that equals the purchasing power of different countries by eliminating differences in prices between countries
• What does quality of life measure?

  The living standards that takes into account more than just GDP
• What are the two main limitations of using GDP to compare living standards between countries?

  Differences in population as it is necessary to calculate GDP per capita, and differences in rates of inflation, as real GDPs must be compared
• What is subjective happiness?

  A measure of how people feel about themselves
• What is the relationship between real income and subjective happiness?

  There is a positive relationship between income and happiness up to a certain level of income, where marginal gains of happiness fall