What is GDP and is it a useful indicator to measure the standard of living?

1) GDP- is the value of all goods and services produced by the economy in a given period (year, quarter...)Quantity of goods x Price of goodsNominal GDP- measures values using current prices. (Prices of G&S increase & Quantitiy of G&S increase)Real GDP- measures values using prices of a base year -value they would have been in the base year- (Prices constant, only quantity increases)Therefore- Nominal GDP > Real GDP -due to inflation(Extra Time- Explain Local currency GDP vs PPP GDP)2) GDP reflects a better standard of living- higher consumption)GDP looks at demand side- households, govt, firms & forerignersGDP = C+I+G+X-MInvestment goods- buildings, plants, capital equipmentSales of used goods, or black market activity not included in GDP.Distinction in quality & quantity growth, no accounting for depletion/pollution, inequalityAlternatives- HDI (GDP, health, education), LSE growth commission- median household disposable income

Answered by Mohammed M. Economics tutor

2880 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

The price of a banana has increased from £0.10 to £0.20. As a result quantity demanded of apples increased from 2.4 million units to 3.6 million units. Calculate the cross price elasticity of demand and interpret the value..


Describe the long run aggregate supply curve.


Explain how monetary policy can be used to prevent business cycles


Define what is meant by GDP, and explain the limitations of using it as a proxy for economic growth.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences