1. SUSTAINABLE & INCLUSIVE Economic Growth
1.1. Sustainable
1.1.1. maintained w/o creating significant economic problems
1.1.2. avoid recession or excessive fluctuations in short growth run
1.2. Inclusive
1.2.1. focuses on productive employment opportunities for majority
1.2.2. no one gets left behind
1.2.3. country benefits from growth
1.3. Negative Economic Growth (Recession)
1.4. Indicated by : National Income Statistics - measures national income of a country
1.4.1. material well-being of the average person in the country is measured by the real GDP per capita
1.4.1.1. Alternative Measures of Welfare / SOL
1.4.1.1.1. Human Development Index (HDI)
1.4.1.1.2. Measure of Economic Welfare (MEW)
1.4.1.1.3. Index of Sustainable Economic Welfare (ISEW)
1.4.1.2. LIMITATIONS of GDP Statistics
1.4.1.2.1. Difficulties in Valuation
1.4.1.2.2. Limitation in Comparison over TIME
1.4.1.2.3. Limitation in Comparison over SPACE
1.4.2. Gross Domestic Product (GDP)
1.4.2.1. total market / monetary value of all final goods & services that is produced within the geographical boundary of a given country in a given period of time, usually one year
1.4.2.2. Real GDP (GDP at constant prices) - more accurate
1.4.2.2.1. To measure the economic growth of a country overtime, real GDP is used
1.4.2.2.2. measures GDP which has been adjusted for inflation
1.4.2.3. Nominal GDP (GDP at current prices) - less accurate ; under/over-estimation
1.4.2.3.1. measures GDP at the market prices prevailing in that time period
1.4.3. Gross National Product (GNP)
1.4.3.1. total monetary / monetary value of all final goods & services produced by the nationals of a country over a given period of time regardless of where the production takes place
1.4.3.2. GNP = GDP + Net Property Income from aboard
1.4.3.2.1. Net Property Income from aboard = Property income FROM aboard - Property income TO aboard
1.4.4. Net National Product (NNP)
1.4.4.1. can be calculated at gross (total amt) OR net (amt after some adjustments) value
1.4.4.1.1. difference between gross & net figures lies in the value of the depreciation of capital stock which occurs through wear & tear or obsolescence (or capital consumption) during the production process
1.4.4.2. GNP - Depreciation = NNP
1.4.4.2.1. depreciation is hard to estimate accurately so economists tend to use gross figures
1.4.5. Household income statistics - indicate monetary well being of country's citizens
1.4.5.1. Personal Income
1.4.5.1.1. employed - involved in the current production of goods & services
1.4.5.1.2. unemployed - do not contribute to the current production of goods & services
1.4.5.2. Disposable income (post-tax income) - ↑ disposable income, ↑ consumer spending
1.4.5.2.1. amt that remains after deductions for personal taxes
1.4.6. USES
1.4.6.1. measures economic growth - economic growth rate
1.4.6.2. measures standard of living in a country
1.4.6.2.1. ↑ the real national income per capita (total population), higher the material standard of living - more goods & services available for consumption
1.5. Actual Economic Growth
1.5.1. increase in real output of a country
1.6. Potential Economic Growth
1.6.1. increase in an economy's capacity to produce goods & services
1.7. attain a continual improvement in living standards overtime
2. Price Stability (Low Inflation Rate)
2.1. High Inflation
2.1.1. higher inflation rates means there is a higher / faster increase in the general price level & erosion of purchasing power of money in the economy - destabilise the economy
2.1.1.1. unbridled inflation
2.1.1.1.1. unanticipated
2.2. Indicated by : Inflation Rate
2.2.1. Inflation - sustained / persistent increase in the general price level over time
2.2.2. % change in the general price level from year to year
2.2.2.1. measured by Consumer Price Index (CPI)
2.2.2.1.1. used to measure the change in price of a fixed basket of goods & services commonly purchased by households over a specific time period
2.2.2.1.2. USES
2.3. low & stable
2.3.1. beneficial for its positive effects on economic growth & SOL
2.3.2. sound economic environment
2.3.2.1. facilitates the process of economic decision-making
3. Full employment of resources
3.1. High umemployment
3.1.1. A high rate of unemployment indicates that the economy is performing poorly
3.1.1.1. gov aims to keep unemployment rates in the economy LOW
3.1.1.1.1. satisfy more of the people's unlimited wants as more of the limited resources (physical & human) are employed to produce goods & services & not left idle
3.2. Indicated by : Unemployment Rate
3.2.1. Unemployment - situation where there are people who are willing & able to work but cannot find jobs
3.2.1.1. ECONOMICALLY ACTIVE (LABOUR FORCE)
3.2.1.1.1. > 15y/o who were either employed / unemployed but are willing to work
3.2.1.2. ECONOMICALLY INACTIVE
3.2.1.2.1. those who were not working, did not have a job to return to and were not looking for a job
3.2.2. ↑ the overall unemployment rate, harder it is for each individual who wants a job to find work
3.2.3. indicates the amount of unemployed human resources in the economy
3.2.3.1. opportunity cost - negative impact on income / growth prospects of the economy
4. KEY ECONOMIC INDICATORS
4.1. Gov
4.1.1. useful in making economic forecasts - put in place necessary policies that can help the economy to achieve its macroeconomic goals
4.2. Firms & Household
4.2.1. useful in making their production & investment decisions
4.3. measures health/performance of the country
5. STANDARD OF LIVING
5.1. Material
5.1.1. measures the quantity of final goods & services that is produced in a given period of time, accrued to each person in the country
5.1.1.1. ↑ real GDP per capita, higher the material well-being of an average resident in the country
5.2. Non-material
5.2.1. examines the quality of life of an average person in the country
5.2.1.1. e.g. no. of working hours per period, leisure hours, quality of physical environment & life expectancy