• 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. Budget 2004-05 and Economic Analysis of Pakistan

    AGRICULTURE: The performance of agriculture fell short of the target by growing at 2.6 percent against the target of 4.2 percent and last year's achievement of 4.1 percent. The slippage in agriculture target was mainly attributable to weak performance of both the major and the minor crops.

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

    as lower interest rates or increased public spending, then the resulting reduction in unemployment will push wages higher [as employers try to attract workers from a diminishing pool of the unemployed]. This will lead to higher prices. On the other hand, when the government tries to control high inflation with

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

    close to each other in terms of their inflation, the UK around 2.8% while Euro Zone is about 2.5%. Since the inception of the MPC in 1997 until around mid 1999, Euro Zone had been keeping lower inflation figures than the UK to the point that in early 1999 they go below what our government's minimum target.

  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

    In 1919, the Nazi party was born because they didn't agree with the Treaty of Versailles. Adolf Hitler took the control over the government and it lead to the Second World War II. After its defeat in 1945, Germany was divided into four zones of occupation: American, English, French, and Russian.

  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?

    to enhance the structure of the public sector, as it was in its way to collapse, because the wages were highly decreasing. In the age of our grandparents, the public sector job was the aim of every graduating student from college as it provided a secure life because of its high salary.

  2. Inflation in Germany

    It is over exaggerated and gives a negative view of Germany. The Source does not mention how Germany was trying its best to pay the bill. The Government printed more money which resulted in inflation. Since this Source was written in 1922 it could not describe the German situation in 1923.

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