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Measuring Economic Performance
Transcript of Measuring Economic Performance
Measuring Economic Performance
Measures of Economic Performance
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By the end of the lesson you will be able:
1. to understand what economics entails
2. to analyse how an economy's performance is measured
3. to evaluate the effectiveness of various measures of economic perforance
A mechanism for deciding what is to be produced, how it is to be produced and who gets the product.
Gross Domestic Product
= The total value of goods and services produced in an economy during a period of time
Real vs Nominal GDP rates
Total vs Per Capita
What is a recession?
What are the problems with using GDP per capita as a measure of standard of living...?
What are the benefits of using GDP as a measure of economic performance?
Compose a tweet summarising what you have learnt this lesson
Value of an economic variable taking account of changing prices over time
Value of an economic variable based on current prices
A measure of the buying power of a nation
Used by many countries so is useful as a method of comparison
A measure of standard of living in a country..?
Measured every quarter by most countries
Does not take into account distribution of income
Does not count volunteer work or self-sufficient farmers
No indication of the black market
No indication of quality of life
No indication of education or healthcare
Difficult to compare as currency values change - Purchasing Power Parity
Spending on future wealthfare may benefit future wealthfare at the expense of current wealthfare
Growth in GDP may be due to a reason such as a growth in the population
Problem of inflation
What is the money being spent on?
Infrastructure or booze and sausage pies...?
Would there be any problems comparing developed countries with LEDCs? If so, why?
Why is GDP important?
What would happen in the economy if GDP fell?
Is more economic growth always a good thing?
Why do we need statistics anyway..?
Write a report on UK and world growth over the last four quarters. If you can, suggest reasons for these trends
GDP, GNI & GNP
Gross domestic product (GDP) is the total market value of all goods and services produced in the country, in a given year or quarter. GDP is equal to all government, consumer, and investment spending, plus the value of exports, minus the value of imports. GDP includes earnings made by foreigners while inside the country. GDP does not include earnings by its residents while outside of the country.
Gross National Income (GNI) is GDP plus income paid into the country by other countries for such things as interest and dividends (less similar payments paid out to other countries).
Gross National Product (GNP) is the total market value of all goods and services produced by domestic residents. GNP includes domestic residents earnings from goods and services produced and sold abroad, and investments abroad. GNP does not include earnings by foreign residents while inside the country.
GDP and GNI thus refer to economic income within the borders of the country, while GNP refers to economic output by the country's residents.
Using the internet, find two countries and compare their GDP TOTAL and GROWTH figures.
What do you notice? Why might they be different?
Will economic growth make us happy..?
UK National Wellbeing
Is there a relationship between real incomes and subjective happiness?
Should GDP per capita be used as a measure of standard of living?
List the top 5 and bottom 5 countries in the world?
: Beveridge thought it was 3%, but free market economists think it is at the market-clearing real-wage rate where the number of workers employers wish to hire = the number of workers wanting work
Measures of unemployment:
Labour Force Survey
Labour force = all those in work or actively looking for work
Which countries do you think make up the top 5 and bottom 5 for total GDP?
What about GDP per capita? Why is there a difference?
Are there any better indicators?