Macroeconomics: Measuring economic growth
- Created by: Jade
- Created on: 13-12-12 10:17
View mindmap
- Measuring economic growth
- Nominal GDP
- Output measured in current prices and so not adjusted for inflation
- Real GDP
- GDP adjusted for inflation
- =GDP figure x base year index/current year price index
- Economic growth is usually measured by the annual percentage change in real GDP
- Income method
- Estimate total earnings by the amount of tax paid
- Transfer payments are not included e.g. pensions and job seeker's allowance
- Estimate total earnings by the amount of tax paid
- Output method
- Measure the value of what firms produce
- Import ant to avoid double counting of raw materials and finished products
- Measure the value of what firms produce
- Expenditure method
- Measure the amount that people spend by VAT
- Important to include exports, exclude imports
- Measure the amount that people spend by VAT
- Nominal GDP
Comments
No comments have yet been made