Study Notes
Economic growth is an increase in the amount of goods and services produced per head of the population over a period of time. It is measured by the increase in the real value of goods and services produced in an economy over time.
- Economic Growth — an increase in the real value of goods and services produced in an economy over time.
Example: A country producing more cars and electronics each year. - National Output — the total value of output of goods and services produced in an economy.
Example: Calculated using output, income, or expenditure. - GDP (Gross Domestic Product) — the total market value of all final goods and services produced within an economy by its factors of production in a given period of time.
Example: The GDP of a country includes all goods and services produced domestically. - Nominal GDP — the value of output produced in an economy in a period of time, measured at current market values or prices.
Example: GDP calculated without adjusting for inflation. - Real GDP — the value of output produced in an economy in a period of time, measured assuming prices are unchanged over time.
Example: GDP adjusted for inflation to reflect true output. - GDP per head/capita — measures the average output/income per person in an economy.
Example: Total GDP divided by the population size.
Exam Tips
Key Definitions to Remember
- Economic Growth
- National Output
- GDP (Gross Domestic Product)
- Nominal GDP
- Real GDP
- GDP per head/capita
Common Confusions
- Confusing nominal GDP with real GDP
- Misunderstanding the difference between potential and actual growth
Typical Exam Questions
- What is economic growth?
Economic growth is an increase in the real value of goods and services produced in an economy over time. - How is GDP per capita calculated?
GDP per capita is calculated by dividing the total GDP by the population size. - What are the consequences of economic growth?
Consequences include increased employment opportunities, improved living standards, and potential environmental impacts.
What Examiners Usually Test
- Understanding of how economic growth is measured
- Ability to explain the causes and consequences of economic growth
- Knowledge of policies that promote economic growth