4.2.1 The Meausremy Of Macroeconomic Performance Flashcards
What are the 4 main macroeconomic objectives?
- Economic growth
- minimising unemployment
- price stability
- Stable balance of payments on current account
Why is it hard to have economic growth without inflation?
Price level will increase
As AD will increase faster than AS
Why is it hard to have economic growth without damaging the current account?
- High levels of spending from consumers
- high marginal propensity to import (depending on country)
- more spending on imports
- worsening of the current account deficit
Philips curve for a trade-off between unemployment and inflation
What is GDP?
A measure of the quantity of goods and services produced in an economy
What is REAL GDP?
% economic growth - % inflation
What is real GDP per capita?
Average output per person in an economy
What are Consumer Price Index and Retail Prices Index?
Measures of inflation
CPI - measures household purchasing power
RPI - measures cost of living and wage escalation
What are the 2 measures of unemployment?
- The Claimant Count
- The UK Labour Force Survey
How do we know productivity is increasing?
More output can be produced with fewer units of input
What is the balance of payments?
A record of all financial transactions made between consumers, firms and the government from one country with other countries
- expenditure on imports
- value on exports
What are exports?
Goods and services sold to foreign countries
Creating an inflow of money to the current account
What are imports?
Goods and services bought from foreign countries
Creating an outflow of money from the current account
What is the current account on the balance of payments?
The balance of trade in goods and services
Index number calculation
