Societal and environmental issues
Session 2
How to evaluate growth?
Growth Domestic Product
Is a good summary of annyal flow of marketed goods and
services through the economic system.
Is the official barometer of living standards and business
cycles.
Appears in newspapers and political debates as an
indicator of economic, political and social progress.
Is used in formulating comparison between national and
international policies.
Growth Domestic Product
GDP = private consumption + investment + (export –
import)
The framework and rules of calculation are set in the
European System of Accounts which is broadly consistent
with the UN System of National Accounts
HOW TO COMPARE ECONOMIC ACTIVITY
AT DIFFERENT POINTS IN TIME ?
NOMINAL GDP VERSUS REAL GDP
Real GDP a measure of GDP in
which the quantities produced are
valued at the prices in a base year
rather than at current prices; real
GDP measures the actual physical
volume of production
Nominal GDP a measure of
GDP in which the quantities
produced are valued at current–
year prices; nominal GDP measures
the current money value of
production
GDP PER CAPITA
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