Measuring growth

Real GDP, per capita, the rate. Know why nominal misleads, and why GDP itself is an imperfect measure. Exam-style Nominal GDP rose 6% but prices rose 4% What happened to real output? Real growth ≈ nominal − inflation = 6 − 4 = 2% Output rose only ~2%; the rest of the nominal rise was price inflation. ✓ ≈ 2% real growth. Always deflate before celebrating. ℹ

Per-capita twist

Real GDP +2% with population +3% → GDP PER CAPITA falls: the average New Zealander is slightly worse off despite "growth".

GDP's known blind spots

Distribution of income — GDP says nothing about WHO receives the extra output.
Non-market work — household labour, volunteering, unpaid care are not counted.
Environmental depletion — resource use and pollution are not subtracted.

Practice for this standard covers the whole topic — flashcards and quiz.