• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

National income and GDP.

Extracts from this document...

Introduction

Economic welfare of individual contents several dimensions. Political freedoms, the social and cultural environment, freedom from fear of violence and the working environment are all the factors that indicate the movements in standards of living. Estimate of GDP pr capita provide the most simplistic and direct indication for measuring economic welfare of citizens. GDP per capita means GDP divided by the level of population. 'National income is often used as the main indicator of the standard of living of an economy. A rise in GDP per head is used as indication of a rise in living standards.' GDP measures national income in terms of output .GDP per head simply means the average output per head. The greater amount of output owned by people in average the more people are able to consume in average. Living standard goes up in turn. In addition, because the growth rate of population is very slow, we can just look at the movement in GDP when we judge the economic performance refers to GDP per head. Beside the growth rate of GDP, the level of GDP is also an important factor to be considered. 1995(QUATATION MARK) The overall trend of the UK's GDP at constant price is upwards slopping. The GDP had increased from �224956m to �829517m between 1960 and 2000. ...read more.

Middle

We should look at both absolute value and employment rate. Especially when we compare changes of employment from economy to economy, the absolute number tends to be unreliable due to different size of population. The model for calculating the unemployment rate seems straightforward. (Unemployment rate = the unemployed/workforce) but difficulties come up with how to define the term 'unemployed' and 'workforce'. Claimant account and ILO account are two main approaches to unemployment in the UK. Both measures are not perfect. Claimant account method is base on the administration of unemployment. So the data is relatively easy to obtain and cost to calculate is very low. But the most obvious disadvantage is that eligibility can be changed by some political purpose. That makes Claimant account not reliable and not comparable internationally. ILO account uses 'the survey method'. Namely, the data is taken from wider survey of unemployment. The downside is that it takes more time and money to acquire the sources. The advantage is that it allows international comparison. Claimant account graph Figure shows the changes of unemployment in real number from 1950 to 1998. There were many insignificant fluctuations in employment before mid of the 1970s and the number rarely above 500,000. Employment rate for first 25 years is less than 2.5%. After 1975, the climate of unemployment worsens dramatically. The number of unemployment is never below 1 million. ...read more.

Conclusion

But UK's inflation performance is getting better in the most recent years. A healthy economy tends to have relatively low inflation because a high rate of inflation will directly reduce the purchasing power of consumer. For instance, inflation is 50% this year. The same amount of money in this year will only be able to buy half amount of goods in last year. Also, high inflation will have negative impact on economic growth, which in turn slow down the growth rate of living standards. A low unemployment is also required in a strong economy. A high unemployment means that the economy hasn't been operated in full capacity and living standards could be improved. Obviously living standard of the unemployed is poor. UK performed very well in both inflation and unemployment before the mid of 1970s. Afterwards, the UK's economic performance in terms of inflation and unemployment is poor although the recent statistic shows some sign of getting better. Low Growth rate of GDP in UK is understandable partly due to the big base level. Some economists point out the poor economic performance in raising living standards is because of experience of three major recessions. From the data you can see the UK citizen's living standards have been improving but slowly relative to main competitors. But the data is I gained is still very crude. There many other criteria should be included such as distribution of income/welfare, productivity, pollution and so on. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Macroeconomics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Macroeconomics essays

  1. Governments set economic objectives - Discuss the relative importance of each of these objectives ...

    If an economy grows too quickly, especially if it is due to excessive consumer spending as it tends to be in the UK, then demand will outstrip supply and prices will rise. Equally, the steps taken to keep inflation low, like relatively high interest rates, can often restrict growth via reduced consumer spending and investment.

  2. Budget 2004-05 and Economic Analysis of Pakistan

    (Rs.in Million) 2003-2004 2004-2005 Classification Budget Revised Budget Pre-Primary & Primary Education 1293 1288 1412 Affairs Services Secondary Education Affairs and Services 1465 1462 1738 Tertiary Education Affairs and Services 5424 5425 7920 Education Services non-definable by leve l15 15 16 Subsidiary Services to Education 19 17 21 Administration 676

  1. How have the Rates of Inflation in the UK Changed Since the Monetary Policy ...

    Graph 4 This graph shows how interest base rates have changed since 1990 and there is a very clear trend which shows that the base rates were falling at the beginning of the decade and then fluctuating at a far lower level for the rest of the time.

  2. Comparing the effects of immigration on GDP in Malaysia, Japan and South Africa.

    Instead of obtaining the $25,000 fee to be smuggled in advance, many immigrants are charge only $2,000 in advance, with the balance due upon successful entry into Japan. The boat trip from Fujian to Japan normally takes one week. In order to pay off smuggling fees, some Chinese immigrants commit crimes in Japan.

  1. Unemployment Issues in Germany

    as well as most of Europe, became part of Napoleon Bonaparte's French Empire. The congress of Vienna in 1814 instituted a German Confederation of thirty-five independent states and free towns. In 1871 Otto von Bismarck, shaped these small states into a great empire, which crashed with Germany's defeat in World War I.

  2. Free essay

    the trend growth rate and measurements of economic welfare

    Although house prices have fallen dramatically, the evidence of destruction as a consequence of rapid asset selling has been seen more obviously in the financial markets, whereby shares are now experiencing a bear market (where values have plunged to less than 20% of their previous peak).

  1. Unemployment: Where is it Going?

    This over increase in the rates of unemployment is due to privatization. Privatization is considered another danger that threatens to increase unemployment in Egypt. It has been a controversial topic since the government started it in the nineties. The privatization program has been carried out by the government in order

  2. Inflation in Germany

    However the source was written in 1922 but it delivers a description that would better suit the situation in 1920.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work