Podcast
Questions and Answers
What does real GDP measure?
What does real GDP measure?
- Value of economic activity in current prices
- Actual physical volumes of economic activity (correct)
- Changes in prices of economic activity
- Nominal value of economic activity
What is nominal GDP?
What is nominal GDP?
- GDP measured in constant prices
- GDP measured in constant quantities
- GDP measured in physical quantities
- GDP measured in current prices (correct)
What is the difference between nominal and real GDP?
What is the difference between nominal and real GDP?
- Total economic activity
- Value of economic activity in current prices
- Changes in prices of economic activity (correct)
- Physical quantities of economic activity
What do we compare in the example of Kelewele and Pure water?
What do we compare in the example of Kelewele and Pure water?
What is the growth rate of nominal GDP between 2010 and 2014?
What is the growth rate of nominal GDP between 2010 and 2014?
What is the price of Kelewele in 2014?
What is the price of Kelewele in 2014?
What is the quantity of Pure water in 2014?
What is the quantity of Pure water in 2014?
What is the total value of GDP in 2014?
What is the total value of GDP in 2014?
What is the effect of private savings equaling private investment on the current account?
What is the effect of private savings equaling private investment on the current account?
What represents the twin deficit in the given equation?
What represents the twin deficit in the given equation?
What is the result of a government running a budget deficit without excess savings from the private sector?
What is the result of a government running a budget deficit without excess savings from the private sector?
How is GDP per capita typically calculated?
How is GDP per capita typically calculated?
What does GDP calculate?
What does GDP calculate?
What is the current status of Ghana's economy?
What is the current status of Ghana's economy?
What is the equation S - I = CA - (T - G) describing?
What is the equation S - I = CA - (T - G) describing?
What is a common interpretation of a higher GDP per capita?
What is a common interpretation of a higher GDP per capita?
What is the current account affected by?
What is the current account affected by?
What is a limitation of using GDP as a measure of economic wellbeing?
What is a limitation of using GDP as a measure of economic wellbeing?
What is an example of a non-welfare element that adds to GDP?
What is an example of a non-welfare element that adds to GDP?
What is the purpose of calculating GDP per capita?
What is the purpose of calculating GDP per capita?
What is an issue with using GDP as a measure of economic wellbeing if only one person owns all the economic resources?
What is an issue with using GDP as a measure of economic wellbeing if only one person owns all the economic resources?
Why might GDP not accurately reflect the standard of living in a country?
Why might GDP not accurately reflect the standard of living in a country?
What is the main goal of fiscal policy?
What is the main goal of fiscal policy?
What does the reading of the budget statement represent?
What does the reading of the budget statement represent?
What are the two types of fiscal policy?
What are the two types of fiscal policy?
What is the primary tool used in fiscal policy?
What is the primary tool used in fiscal policy?
What is the role of government in fiscal policy?
What is the role of government in fiscal policy?
What is the impact of fiscal policy on the economy?
What is the impact of fiscal policy on the economy?
What is the primary objective of fiscal policy?
What is the primary objective of fiscal policy?
What does fiscal policy involve?
What does fiscal policy involve?
What does economic growth relate to?
What does economic growth relate to?
What can economic growth be defined as?
What can economic growth be defined as?
What is economic growth in terms of production?
What is economic growth in terms of production?
What is the time frame of economic growth?
What is the time frame of economic growth?
What is economic growth related to?
What is economic growth related to?
What is economic growth an expansion of?
What is economic growth an expansion of?
What is the nature of economic growth?
What is the nature of economic growth?
What is the result of economic growth?
What is the result of economic growth?
Study Notes
The Twin Deficit
- The equation S - I = CA - (T - G) states that the excess of private savings over private investment finances the current account and the government budget deficit.
- If private savings equal private investment, then the current account equals the government budget deficit, i.e., T - G = CA.
Economic Performance Over Time
- GDP per capita (per capita income) is calculated as GDP / population.
- Ghana is now a lower middle-income country.
Economic Activity or Economic Wellbeing?
- GDP calculates the level of economic activity within an economy.
- Some use GDP as a measure of economic wellbeing, as higher GDP per capita means higher income and the ability to meet basic needs.
- However, there are limitations to using GDP as a measure of economic wellbeing, including:
- Distributional issues: GDP does not account for income inequality, e.g., if only the president owns all the economic resources.
- Non-welfare elements: high military spending may increase GDP but does not improve standard of living.
Real vs Nominal GDP
- Real GDP measures actual physical volumes of economic activity, excluding changes in prices.
- Nominal GDP is the cedi value of all economic activity, including changes in both physical quantities and prices.
- The difference between the growth of nominal and real GDP is solely due to changes in prices.
Meaning of Economic Growth
- Economic growth relates to long-term changes in real GDP.
- It can be defined as the expansion of a country's potential GDP or national output.
- It is a sustained expansion in the production of goods and services in an economy over time.
Fiscal Policy
- Fiscal policy refers to changes in the level of government spending and/or taxes meant to influence the level of economic activity.
- Reading of the budget statement is an announcement of government fiscal policy.
- Fiscal policy may be expansionary or contractionary.
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Description
This quiz covers the concept of the Twin Deficit in economics, specifically the relationship between private savings, private investment, current account, and government budget deficit.
