2.5

• Actual Growth


  Increase in the level of real GDP of an economy
• Potential Growth


  Increase in the productive potential of an economy
• Nominal GDP


  GDP that has not been adjusted for inflation
• Real GDP 


  GDP that has been adjusted for inflation
• Per Capita GDP


  GDP that has been adjusted for population
• GNP


  GDP plus the production by any citizen overseas
• GNI


  GDP plus net overseas interest payments and divends
• Limits of GDP as a comparison of living standard

  • Needs to be adjusted
  • Does not tell us how equally it is distributed
  • tells the level of production but not the pattern of production
  • makes no adjustment for environmental degradation
  • tells nothing of how growth is achieved
• Factors causing an increase in potential growth

  • Immigration
  • Better skills/education
  • Greater levels of investment
  • Discoveries of new resources
  • Technological advancements
• Factors causing actual growth

  Anything which increases AD