INDICATORS OF NY
GNP: Takes into account the locals that work abroad
Real vs Nominal: Real takes into account inflation. Rise in nominal GDP does not necessarily mean a rise in quantity of goods and services produced. A rise in GDP can be attributed to the rise in GPL/rise in actual output. If inflation rate > nominal GDP growth, the material SOL may not have improved
Per capita: Needed bc takes into account changes in size of population. If the population has increased by equal or greater proportion than real GDP, the material SOL has not increased!
PPP: Adjust GDP using PPP
Official Exchange Rates fluctuate significantly due to speculative activities, movements in the relative prices of only traded goods and government intervention in the currency market -> ceteris paribus, using such xchange rate causes GDP value to change arbitrarily, makes comparison of GDP meaningless
Furthermore, does not reflect purchasing power of the currencies.
Example US and SG has same GDP per cap. of USD 100, using official exchange rate - Seems like same SOL. But GPL in SG>US, hence the USD 100 in US will be able to buy more G&S than in SG.
BOP also can measure Mat SOL
USE OF NY STATISTICS
- Measure economic growth: a drop in growth rate is a call to attention for govt. to introduce policies that stimulate AD to increase production and NY
- Measures level of material wellbeing
- Also good bc increase in GDP/capita usually means more ppl being employed to increase pdtion hence lower unN
- However if ppl are using non-lbr FOPs to increase, then unN may not decrease
To compare within country, over time:
Real GDP per capita
To compare between countries:
PPP adjusted GDP per capita
- However many devped ctys have low inflation hence real figs may not have sig advantage
- Many DCs have low birth and pop. increases by 1% annually only