Economic Growth

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  • measuring economic performance
    • measuring growth
      • Economic growth is a measure of an increase in REAL GDP
        • GDP = The total amount of good and services produced in a country in a year, taking out inflation
        • NORMINAL GDP: Measures the value of output of the final goods and services using current prices every three months
      • potential economic growth: measure of the increase in capacity
        • shown by an outwards movement in PPF
        • measure of how efficient the economy is
      • If the economy has two consecutive quaters of negative growth that it is in recession
        • - less spending
        • -  less income and output in the economy
        • unemployment rises and a fall in living standards
    • Changing living standards
      • increase in GDP causes an increase in standards of living
        • people can afford more goods and services
        • feel that their lives are better
        • dont need to work as hard to achieve the requirements for life
      • a rise in income doesn't always make standards of living better
        • how the money is distributed
        • if inflation has been taken into account
        • amount spent on investment and long term social benefits
        • population
          • better to look at GDP Per capita
            • is the total GDP divided by the population. It gives a better indicator of incomes
      • STANDARD OF LIVING: measure of quality of life

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