Measurements of economic performance

Economic growth

• measured  using national income
• actual growth = increase in GDP- gross domestic product
• potential growth- increase in productive capacity of country
• real values have been ajusted to remove effects of inflation
• nominal- current Y without adjustments
• value- qaulity
• volume- quantity

How is GDP measured?

• sum of all goods & services produced in a year  by a country
• sum of incomes/expenditure
• circular flow of income: injections & leakages
• increases = country is growing- implies…