Unit 3.1 - Measuring Economic Activity and Illustrating its Variations
What you need to know and understand:
Key concepts:
Concepts to understand:
- National income accounting as a measure of economic activity
- Equivalence of the income, output and expenditure approaches to national income accounting, with reference to the circular flow model
- [Nominal] Gross domestic product (GDP) as a measure of national output
- [Nominal] Gross national income (GNI) as a measure of national output
- Real GDP and real GNI
- Real GDP/GNI per person (per capita)
- Real GDP/GNI per person (per capita) at purchasing power parity (PPP)
- Business cycle: short-term fluctuations and long-term growth trend (potential output)
- Appropriateness of using GDP or GNI statistics to measure economic well-being—use of national income statistics for making:
- comparisons over time
- comparisons between countries
- Alternative measures of well-being
- OECD Better Life Index
- Happiness Index
- Happy Planet Index
Key concepts:
- Scarcity
- Choice
- Efficiency
- Equity
- Economic well-being
- Sustainability
- Change
- Interdependence
- Intervention
Concepts to understand:
- Change in the conditions of the demand and supply sides of the economy cause economic activity to vary over time.
- Fluctuations in economic activity impact the economic well-being of individuals and societies.
- Different schools of macroeconomic thought identify different causes and offer different solutions for macroeconomic problems.
TEXTBOOK unit 3.1
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