2.1.1 Economic Growth

• Economic growth


  A rise in the value of Gross Domestic Product (GDP)
• GDP


  Measures the quantity of goods and services produced in an economy
• Rise in economic growth

  Increase in national output
• Economic growth


  • Leads to higher living standards
  • Leads to more employment opportunities
• Real GDP


  The value of GDP adjusted for inflation
• Nominal economic growth of 4%<|>Inflation of 2%

  Real economic growth of 2%
• Nominal GDP


  The value of GDP without being adjusted for inflation
• Nominal GDP can make GDP appear higher than it really is
• Total GDP


  The combined monetary value of all goods and services produced within a country's borders during a specific time period
• GDP per capita


  The value of total GDP divided by the population of the country
• Gross National Product (GNP)


  The market value of all products produced in an annum by the labour and property supplied by the citizens of one country, including GDP plus income earned from overseas assets minus income earned by overseas residents
• Gross National Income (GNI)


  The sum of value added by all producers who reside in a nation, plus product taxes (subtract subsidies) not included in the value of output, plus receipts of primary income from abroad
• Purchasing Power Parity (PPP)


  A theory that estimates how much the exchange rate needs adjusting so that an exchange between countries is equivalent, according to each currency's purchasing power
• PPP helps to minimise misleading comparisons between countries
• GDP does not give any indication of the distribution of income
• GDP may need to be recalculated in terms of purchasing power to account for international price differences
• GDP does not account for large hidden economies such as the black market
• GDP gives no indication of welfare
• In the UK in 2012, 91% of people were satisfied with their family life
• Greece has the lowest life satisfaction rating of the OECD countries, as of 2015
• The UK economy grew by 5% in GDP per capita between 2007 and 2014


  Showed no change in life satisfaction
• The higher the GDP per capita

  The higher the average life satisfaction score