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Key Economic Indicators (National Income (3 Measures of National Income…

- - - - Total money value of all final goods and services produced within the geographical boundary of the country, regardless of the ownership of the factors of production, within a specific period, normally a year.
    - - Total money value of all final goods and services produced by factors owned by residents, irrespective of whether the factors are located within the geographical boundary of the country or abroad,within a specific period normally a year.
        
        GNP = GDP + NPYA
    - - Total money value of all final goods and services produced by factors owned by residents, irrespective of whether the factors are located within the geographical boundary of the country or abroad after accounting for depreciation, within a specific period normally a year.
  - - - 1. Nominal GNP does not take into account changes in prices over time
        
        Should use Real GNP instead as it eliminates increases in calulated national output that were merely due to an increase in price.
        
        Real GNP: Current year GNP x Base Year Index/ Current year index
        
        (% change in GDP= % change in nominal GDP-% change in general price level)
      - 2. Changes in size of population over time have to be considered
        
        Should use real per capita GNP
        
        Real per capita GNP= Real GNP / Total population
      - 3. Changes in income distribution over time are not considered
        e.g rich minority receives large proportion of the GNP while poor majority receives small proportion.
        
        Should use Gini Coefficient to measure inequality
      - 4. Externalties incurred over time are ignored
      - 5. Some productive activities are excluded/included over time
        
        Non marketed items (e.g. services of housewives, subsitence farming)
        
        Underground economy (e.g goods and services that are illegal , drugs and prostitution) (e.g. Transactions that are illegal, tuition)
      - 6. Leisure and human costs of production over time are not taken into account
      - 7. Changes in composition of output over time
        
        National Income does not reflect changes in the quality and type of goods and services in a dynamic world.
      - 8. Changes in statistical coverage and reliability of data over time
    - - 1.Comparisons between countries are made in terms of a common currency
        
        official exchange rates do not reflect the relative purchasing power of the currencies. Should use Purchasing power parity (PPP) which measures the amount of foreign currencies needed to buy the same basket of goods and services in the 2 countries.
      - 2. Countries differ in the size of the population
      - 3. Countries differ in their distribution of income
      - 4. Countries differ in external cost
      - 5. The black economy differs between countries
        
        Developing countries have a larger underground economy (illegal transactions) + major problem of omission of non-marketed transactions.
        
        Developed countries have a higher degree of specialization of production
      - 6. Countries differ in the amount of leisure time enjoyed
      - 7. Countries differ in their composition of national output
        
        Countries with similar capita per GNP may produce different range of goods. (i.e. some have a large proportion on military or household goods)
      - 8. Accuracy and reliability of data differ between countries
- - - - MEW= GNP-capital depreciation - regrettables + allowance for leisure + non-marketed activities + public amenities + private durable goods
    - - HDI= real GDP per capita + knowledge (measured by the adult literacy rate and the mean years of schooling received by adults 25 years and above) + health ( measured by life expectancy and infant mortality rates)
    - - Account for factors that GDP ignores such as : Inequality, non-marketed items ( household production) , composition of output ( government expenditure on defence), envirionmental costs and resource depletion and damage.
    - - Measure of quality of life/well being of a country
        
        PQLI: Basic literacy rate + indexed infant mortality + indexed life expectancy) / 3
    - - Measures multiple dimensions of social progress, benchmarking success, and catalyzing greater human wellbeing
        
        Measures basic human needs ( Nutrition and basic medical care, water and sanitation, shelter and personal safety) , foundations of wellbeing ( Access to basic knowledge, access to information and communication, health and wellness, ecosystem and sustainability, opportunity ( personal right, personal freedom and choice, tolerance and inclusion, access to advance eduction)