1.2/1.3 Macroeconomic Indicators And Index Numbers

Question 1

How do we measure economic growth?

Answer 1

Real gross domestic product

Question 2

Gross domestic product definition

Answer 2

A measure of the national income of an economy, based on the value of all income earned in an economy over a period of time

Question 3

National income definition

Answer 3

Total income generated within an economy over a period of time

Question 4

Real gross domestic product definition

Answer 4

Measures the value of GDP after removing the affect of price changes

Question 5

Real gross domestic product per capita definition

Answer 5

Income per person

Question 6

Real GDP per capita equation

Answer 6

Real GDP
—————
Population

Question 7

How do we measure price stability?

Answer 7

Consumer price index and retail price index

Question 8

Inflation definition

Answer 8

An increase in the average level of prices measured over a period of time

Question 9

Price level definition

Answer 9

The average level of prices of a range of goods and services at a point in time

Question 10

What does CPI not include that RPI does?

Answer 10

Mortgage payments/rates

Question 11

How does CPI and RPI work?

Answer 11

• The survey finds out what consumers spend their income on. From this basket of goods created.
• The goods are weighted according to how much income is spent on each item
• then measure inflation form comparing the basket of good from different months

Question 12

What is the headline inflation indicator?

Answer 12

Consumer price index

Question 13

How do we measure unemployment?

Answer 13

Claimant count as the labour force survey

Question 14

Unemployment definition

Answer 14

Those of working age who are currently out of work but actively seeking work

Question 15

Labour force definition

Answer 15

Those of working age are either in work or actively seeking work

Question 16

Claimant count definition

Answer 16

The measure of unemployment in the UK that counts those receiving unemployment benefits

Question 17

Unemployment rate definition

Answer 17

The number of unemployed people expressed as a percentage of the current labour force

Question 18

What unemployment indicator is used in UK?

Answer 18

The labour force survey

Question 19

Unemployment rate equation

Answer 19

Number of people unemployed
—————————————
Size of labour force

X100

Question 20

Productivity definition

Answer 20

Measure of efficiency comparing the level of output with the level of inputs

Question 21

Labour productivity definition

Answer 21

Output per worker, per hour

Question 22

Capital productivity definition

Answer 22

The output per item of capital equipment measured over a period of time

Question 23

Current account definition

Answer 23

The net income flows earned through either trading goods and services or from investments located overseas

Question 24

Current account deficit definition

Answer 24

When the flows of money out of the country is greater than the flows of money into the country

Question 25

What are the three sections the balance of payments is divided into?

Answer 25

- current account - capital account - financial account

Question 26

Index number definition

Answer 26

A number designed to be used to show the size of changes in a variable over time

Question 27

What is a base year?

Answer 27

When a year starts of at an index number of 100 and all other years are compared to this year

Question 28

Weighted price index definition

Answer 28

And average level of prices adjusted so the price changes in popular items affect the price index more than prices changes in less popular items

Question 29

Problems with CPI

Answer 29

- as it is based on imaginary typical family it never really reflects anyone’s exact spending patterns - includes goods and services not everyone buys e.g. cigarettes - doesn’t take into account a change in the quality of the item eg a computer may cost more in 2019 then in 2018 but it is more advanced