Measuring economic activity, the business cycle and economic growth

Learning objectives

Define GDP and GNI, explain the output, income and expenditure approaches, and distinguish nominal from real and total from per capita measures, including purchasing power parity

Calculate nominal GDP from national income data using the expenditure approach, real GDP using a price deflator and the rate of economic growth

Describe the phases of the business cycle, distinguish short-term fluctuations from the long-term growth trend and identify output gaps

Evaluate the limitations of GDP as a measure of well-being and outline alternative measures such as the OECD Better Life Index, the Happiness Index and the Happy Planet Index

Explain how economic growth is measured and how it is caused by increases in aggregate demand and in the quantity and quality of factors of production

Evaluate the consequences of economic growth for living standards, the environment and the distribution of income