LS2- Measures of Economic Performance Flashcards
Two key indicators of economic performance
- inflation
- unemployment rates- whether an economy is using its resources to the full
Why is economics a non-experimental discipline?
It is not possible to conduct experiments to see how the economy reacts to various stimuli in order to learn how the economy works.
Index number formula
Index number= raw number in period/raw number in base period x100
GDP
Gross domestic product
- represents the total output of an economy during a period of time
GNI
Gross national income- takes into account that incomes flow between countries
- the total amount of money earned by a nations people and businesses in a given time period
- for some purposes, is a more helpful measure
Disinflation
Inflation falling from the previous period
Deflation
A decrease in the average level of prices in an economy (negative inflation)
- bad for the economy as it is perceived to be in terminal decline
- if prices are expected to fall, people will save money to buy in the future, so there will be low consumption
Claimant count of employment
People claiming this must declare that they are out of work, whilst being able to work and willing to work during the week in which their claim is made.
Problem of claimant count
- It nonetheless includes some people who are claiming benefit, but are not actually available or prepared to work.
- Excludes some people who are willing and and are looking for work, but not eligible for unemployment benefit e.g. women after childbirth
ILO unemployment rate
A measure based on the labour force survey
- identifies the number of people available for work, and seeking work, but without a job
Underemployment
People who cannot find jobs for which they are qualified, and who take jobs in second choice occupations e.g. a qualified doctor working as a taxi driver
CPI
Consumer Price Index- measures overall change in consumer prices based on their basket of goods and services
Balance of payments account
A record of all financial dealings over a period of time between economic agents of one country and all other countries.
Current account
Where payments for the purchase and sale of goods and services are recorded
Trade in goods- visibles
- visible exports are sold to foreigners
- visible imports are bought by domestic residents from foreigners
Trade in services- invisibles
- exports sold to foreigners
- imports bought by domestic residents e.g. a holiday of a UK national in Spain
Primary income
Results from the loan of factors of production abroad. For the UK, most of this income is generated from interest profits and dividends on assets owned abroad.
