Measuring Economic Activity (DP IB Economics: HL)

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Ghana, located in West Africa, is one of the fastest-growing economies in the region, with $72.8 billion GDP in 2021, up from $32.3 billion in 2011. The country's economy is diversified, with sectors ranging from agriculture and mining to manufacturing and services.

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Cambodia has achieved consistent strong economic growth with, from 2011 to 2019, an average annual real GDP growth rate of around 7%. Thanks to garment exports and tourism it is one of the fastest-growing economies in the world. However, due to the impact of the COVID-19 pandemic, Cambodia's economy contracted by 3.1% in 2020.

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The government of India has implemented new policies to stimulate the economy, focusing on increasing the circular flow of income. This includes measures to boost investment and government spending, which are expected to enhance economic activity across various sectors.

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As part of its economic stimulus package, Japan has increased government spending to stimulate demand and production. Economists are closely monitoring how this will impact the overall circular flow of income and whether it will lead to sustainable growth.

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A recent study comparing living standards between the USA and China utilised Purchasing Power Parity (PPP) to adjust for differences in the cost of goods and services. This method provides a clearer comparison of how far incomes go in different economies.

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Using GDP as a measure of well-being has limitations, as it does not capture income inequality, unpaid work, or environmental degradation. Policymakers are now considering alternative metrics to better reflect the overall well-being of a nation.