Course: Pre-U Economics
Between 2009 and 2011 Ireland’s real GDP is expected to fall by more than 10%. Explain what is meant by this, and examine the extent to which measure of national income are an accurate reflection of living standards in more economically developed countries (MEDCs).
Being an MEDC, Ireland is one of the few economically developed countries being tipped to fall in real GDP from 2009 to 2011. To reiterate, Ireland have not been making positive progress in terms of their economic growth, so their real GDP is indicating the hit and is expected to fall by just over 10%. But what does this mean for Ireland? By definition, Real GDP is the calculation of the Actual output/production of an economy adjusted with Inflation, it is in real terms so that we can be more defined and work out Ireland’s GDP while taking into account the general price level of goods in that country (inflation). Gross Domestic Product (GDP) is one of many economic indicators that help us understand how well an economy is doing annually. We can also use it in comparison to other economies and evaluate why an economy might be depreciating in output or appreciating in output. Other defined measures of output are; GDP per capita, which is a country’s GDP divided by the population of an economy. Another defined measure is Nominal GDP, which is the same standard calculation of an economies output but without taking into account inflation. As Irelands GDP is expected to fall by 10% in 2 years, Ireland will have to make necessary adjustments to their economy to prevent this assumption from happening. But this might not be the case. To perform these necessary actions, Ireland need to trust that the assumption is likely to happen and the measure of Real GDP is accurate enough to interpret their GDP over time. The problems with interpreting GDP figures over time and in the future, is that, the economy is constantly changing. One example is Ireland’s population might rapidly increase...
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