A detailed summary of all the Macroobjectives in Economics which is useful as a revision source for preparation for Unit 2 of the economics GCSE Syllabus. Applicable to all GCSE Exam boards
Economic Growth:
Definition: Economic growth is defined as the growth of GDP (value of output)
over time. The GDP is used as an Index to indicate how well an economy is
growing in relation to its total output.
An increase in GDP overall leads to an increase in the total output whilst a
decrease in the GDP leads to a decrease in the output produced in a country.
There are also subcategories present in GDP. These indicators are GDP per Capita
and GNI is split into GNI per Capita. 1(What is current purchasing power accounting?, 2020)
FindAnyAnswer describes GDP per Capita as the ‘’2 (What is GDP and how is it
measured? 2021)3((UK Private Consumption: % of GDP, 1955 – 2021 Data,
2021)45(Who Is Paying for India's Healthcare?, 2021) only 3% of their
expenditure is used for Government hospitals and this accounts for Rs. 64402.5
Cr., equivalent to 6 billion dollars. The UK spends more on healthcare than India,
therefore healthcare is possibly called more important in the UK than in India
(however this may not be true as India is a communist country and therefore
must prioritise healthcare being equal and for everyone).
GNI stand for Gross National Income and is quite similar to GDP. GNI also
accounts for the monetary value of all the goods and services produced within a
country however it also adds the net income received from other countries. For
Example, a firm based in America may gain lots of revenue and profits from the
goods and services it produces and sells. However, if the firm is aware that their
services are demanded in another market in a different country it is lucrative for
them to set up another production factor in that country, to overall increase their
revenue and profits. Assuming the firm builds a new factory in Canada but
decides to send back money from Canada back to America, possible when the
exchange rates are the highest and are most favourable to the firm, America’s
GDP stays the same but its GNI increases. In addition, Canada’s GNI decreases as
it loses the money as it exported to America. Therefore, it’s GNI decreases.
However, whether GNI increases or decreases depends on the net income of the
1Findanyanswer.com. 2020. What is current purchasing power accounting?. [online] Available at:
<https://findanyanswer.com/what-is-current-purchasing-power-accounting> [Accessed 17 April 2021].
2BBC News. 2021. What is GDP and how is it measured?. [online] Available at:
<https://www.bbc.co.uk/news/business-13200758> [Accessed 3 April 2021].
3Ceicdata.com. 2021. UK Private Consumption: % of GDP, 1955 – 2021 Data. [online] Available at:
<https://www.ceicdata.com/en/indicator/united-kingdom/private-consumption--of-nominal-gdp> [Accessed 3 April
2021].
4En.wikipedia.org. 2021. Government spending in the United Kingdom - Wikipedia. [online] Available at:
<https://en.wikipedia.org/wiki/Government_spending_in_the_United_Kingdom> [Accessed 6 April 2021].
5 The Wire. 2021. Who Is Paying for India's Healthcare?. [online] Available at: <https://thewire.in/health/who-is-
paying-for-indias-healthcare> [Accessed 6 April 2021].
, country, net meaning the difference between the money being imported and the
money being exported out of the country. A country may lose a lot of money as
many of its investors are foreign and send out huge chunks of money back to
other countries and this may be below the amount of money received by the
country from its own people who work in those foreign countries. GNI is very
dependent on its net income and the direction which money flows to and from
foreign investors and forms. Often GNI per Capita is used as a better indicator of
the economic growth of a country than GDP per Capita. GNI per Capita is the GNI
divided by the total population of the country. 6Ons.gov.uk. 2021. Gross National
Income: Current price: Seasonally adjusted £m - Office for National Statistics.
[online] Available at
<https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmz/
ukea> [Accessed 8 April 2021]. The GNI in the UK in 2020, quarter 4, was 538,785
million pounds which has been a sudden increase from 2020 Quarter 2 at 459 762
million pounds of GNI. 7(Dickson, 2021) In the first quarter of 2021, the GNI was
2,176.3 billion pounds, an 81.2 billion pounds increase from last years GNI and is
expected to increase to 2,324.3 billion pounds in 2022 and 2,418.8 billion pounds
in 2023. This is a 4 % increase of the GNI from 2020 to 2021. From 2018 to 2020
the GNI has decreased by 2 .18 % which was caused due to a fall in income,
therefore consumers are unable and unwilling to buy goods and services since
their disposable income is lower and it takes a larger proportion of their total
income than if their income was higher, and people keep their money when the
country is undergoing a recession or a depression. In order to counteract the
decreased demand of consumers, a contraction occurs along the supply curve
caused by a leftward shift of the demand curve and the firm supplies less, this
results in less goods and services being bought and sold and the value of goods
and services sold also decreases, overall, the GDP decreases. GNI also decreases,
since trade between countries who are trade partners with the UK is limited and
therefore the worth of the pound diminishes, therefore the GNI also decreases
since foreign based firms or TNC’s send money back home and thus the GNI
decreases. The decrease in GNI does not follow the trend of the GNI in the past 30
years as the House of Commons Library states that the data shows there as been
an increase in the GNI for the past 10 years. In 2010 the GNI was 1,606.0 billion
pounds and has increased to 1,660.1; 1,711.8; 1,780.3; 1,863.0; 1,919.6;
1,994.7; 2,068.8; 2,141.8; 2,214.4 billion pounds respectively from the year 2011
6(Gross National Income: Current price: Seasonally adjusted £m - Office for National Statistics, 2021)
7Dickson, A., 2021. Spending Review: Reducing the 0.7% aid commitment. [online] House of Commons Library.
Available at: <https://commonslibrary.parliament.uk/spending-review-reducing-the-aid-
commitment/#:~:text=In%202021%20the%20Government%20will%20allocate%200.5%20per,that%20commitment
%20and%20implications%20of%20the%20proposed%20changes.> [Accessed 10 April 2021].
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