Economic growth

• Economic growth


  An increase in the value of all goods and services produced in an economy in a year
• GDP

  The total value of all goods and services produced in an economy in a year
• Real GDP

  GDP with inflation taken into account (constant prices)
• Reasons why GDP is a good measure

  1.GDP has a posotive corelation with living standards (is representitive)

  2.GDP is an objective measure of economic growth

  3.GDP is relatively easy to obtain

  4.GDP is internatinally standardised and recognised
• Reasons why GDP is a bad measure

  1.GDP doesn't account for the distribution of wealth

  2. GDP doesn't capture all activitys within an economy (sub-systems)

  3.GDP doesn't take wellbeing into account e.g pollution

  5.GDP doesn't represent the quality of goods and services
• Why is GDP internatinally recognised

  GDP can be used to adjust policies and evaluate performance
• Purchasing power parity (PPP)

  The value of currency, expressed as the number of goods and services a unit of money can buy
• Disposable incomes

  The amount of money a household or individual has available for spending and saving after taxes and other expenses are taken out of their incomes
• GNI

  Gross Natinal Income measures the net income earned by citizens operating outside of the country + the GDP However, it is harder to obtain.
• Remmitance

  A sum of money typically sent back home or abroad by family
• Factors that affect happiness

  1.Health

  2.Job

  3.Trust in society

  4.Where you live

  5.Political freedoms
• Limitation of Natinal Happiness Economics

  -happiness is a subjective meaasure

  -It is very time consuming to collect
• Easterlin Paradox

  It states that Happiness and income are positivley correlated at low levels of income

  
  

  However, higher levels of income are not associated with increases in happiness
• Economic indicators

  1. Unemployment
  2. Economic growth
  3. Current account
  4. Inflation
• Economic agents

  1. Businesses/firms
  2. Consumers
  3. Government
  4. Workers
• Why are PPP used?

  To imporve the accuracy when comparing data between countries