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GDP
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Specification
 GDP
Gross Domestic Product
Definition : Value of Total National (or domestic) OUTPUT

Nominal GDP
(or 'money' GDP or GDP at 'current prices')

Real GDP
Is GDP after inflation has been
removed.

Growth is positive real GDP

If there is 2% inflation
and Nominal GDP rises by 2%
This represents zero actual growth.

GDP per Capita

Value of GDP divided by the population

Gross National *Income

GNI
All money earned by the country whether at home or abroad.

EXTRAS
AD = Demand for all goods in Britain
AD = C + I + G + ( X­I )

AD = GDP

OUTPUT = EXPENDITURE = *INCOME

Output: the value of all products sold

Expenditure: Spending by Consumer,
business & Government

Income: Wages, (interest from savings etc)

Gross Domestic Product GDP

Measure of Growth

PPF Graph

Hidden Economy

Black Economy

Purchasing Power Parity

$10

Value Added
Problems of comparison with other Countries

GDP per Capita

Population Growth
reduces figure

Currency Value goes down.

­­­> GDP goes down

Hides Inequality

Accelerator affect
Affects future Investment

Problems Of comparison over time

 GDP per Country & Per capita

Who has more GDP Ireland or UK

GDP Per Capita who is richer Ireland or the U.K

Who has probably got more inequality

Who has got more % Growth

HandOut
GDP per Capita https://www.worldometers.info/gdp/gdp­per­capita/

100%
average
 Calculating with index numbers
A B C
250 270 310
If 'A' is the base year (100) find the index for 'B'
What does that mean in terms of % 108
If 'B' is the base year (100) find the index for 'C'

All compared with 2010

Re­do the table to compare each year with the year before
ie. Chain based index

100 110 109.1 125 106.7

109 114.7 119 103

Rate of GDP growth

if the rate of GDP growth falls

is GDP Falling Y / N
https://www.tutor2u.net/economics/reference/10­flaws­in­gdp­as­a­measure­of­
living­standards
1

B
2

Nominal

B
3

C
4

B
5

A
6

A
7

A
8

D
9

C
10

C
11

C
12

D
13

B
14

A
 Answers

1. B 6. A 11. C
2. B 7. A 12. D
3. C 8. D 13. B
4. B 9. C 14. A

5. A 10. C 15.
Attachments

Basket Of Goods and Food Survey.xlsx