Unit 2 A* PowerPoint Revision Notes

Theme 2
Macroeconomics

,2.1 Measures of Economic
Performance
• 2.1.1 Economic Growth
• 2.1.2 Inflation
• 2.1.3 Employment and Unemployment
• 2.1.4 Balance of Payments

,2.1.1 (a) Rates of Change of Real
GDP as a Measure of Economic
Growth
• Economic growth is the rate of change of output.
• Economic growth is an increase in the long-term productive potenti
of the economy
• Economic growth is therefore measured by the percentage change
GDP per year
• Gross Domestic Product is the standard measure of output, it is the
total value of goods and services produced in an economy in a year

, 2.1.1 (b) Distinctions between: Real and Nomin
Total and Per Capita, and Value and Volume
Real v Nominal Total v Per Capita Value v Volume
• Real GDP strips out • Total GDP represents • Value references the
the effects of the overall GDP for a added value in an
inflation whereas country whereas GDP economy, it is the
nominal GDP does per capita is the total total output minus
not GDP divided by the immediate
number of people in consumption
a country • Volume references t
quantity of goods an
services produced