economic growth

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  • econmic growth - rate of change of output, an increase in the log term productive potential of the country - typically measured by % chnage in real GDP per annum
    • gross domestic product - total value of goods and services produced in a country within a year - indicator of standard of living in a country
      • real GDP =strips out effects of inflation whereas nominal doesnt
        • real values - volume of national income but nominal = value of national income
    • comparisons - over time and between countries
    • purchasing power parities
  • gross domestic product - total value of goods and services produced in a country within a year - indicator of standard of living in a country
    • real GDP =strips out effects of inflation whereas nominal doesnt
      • real values - volume of national income but nominal = value of national income
  • an exchange rate for 1 currency for another which comapres how much a typical basket of goods in the cuntry costs compared to 1 in another country
    • useful in comparing countries - takes into account cost of living - beg mac index
    • purchasing power parities
  • problems with using GDP to compare standard of living
    • inaccuracy of data - ineffiectn collection, black markets, no home-produced services, errors in infaltion rate, take away transfer payments
    • inequalities - increase in national income may not increase living standards everywhere
    • spending - some types of expenditure eg defece dont increase living standards but will increase GDP
    • quality of goods and services - not reflected in price therefore living standards may have increased more than GDP would suggest
    • oter factors which involve living standards - eg education

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