Economics · Unit 3: Macroeconomics

EC3.1 — Measuring economic activity and illustrating its variations

Economics · SL / HL · syllabus-mapped notes

1. EC3.1.1

   National income accounting as a measure of economic activity

   Explain how national income accounting measures the level of activity in an economy.

2. EC3.1.2

   Equivalence of the income, output and expenditure approaches to national income accounting, with reference to the circular flow model

   Explain why the income, output and expenditure approaches give the same total, using the circular flow.

3. EC3.1.3

   [Nominal] Gross domestic product (GDP) as a measure of national output

   Explain GDP as a measure of national output, and calculate it.

4. EC3.1.4

   [Nominal] Gross national income (GNI) as a measure of national output

   Explain GNI as a measure of national output, and how it differs from GDP.

5. EC3.1.5

   Real GDP and real GNI

   Explain why output must be adjusted for inflation, and calculate real GDP and real GNI.

6. EC3.1.6

   Real GDP/GNI per person (per capita)

   Calculate GDP and GNI per person, and explain why population size matters for comparison.

7. EC3.1.7

   Real GDP/GNI per person (per capita) at purchasing power parity (PPP)

   Explain why purchasing power parity is needed to compare living standards between countries, and calculate per capita figures at PPP.

8. EC3.1.8

   Business cycle: short-term fluctuations and long-term growth trend (potential output)

   Explain the phases of the business cycle and distinguish short-term fluctuations from the long-term growth trend.

9. EC3.1.9

   Appropriateness of using GDP or GNI statistics to measure economic well-being, use of national income statistics for making:

   Evaluate how far GDP and GNI statistics capture economic well-being, comparing over time and between countries.

10. EC3.1.10

    Alternative measures of well-being

    Explain what the OECD Better Life Index, the Happiness Index and the Happy Planet Index measure that national income does not.