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Edexcel A Level Economics > 2.1 Measures of economic performance > Flashcards

2.1 Measures of economic performance Flashcards

1
Q

2.1.1 A)
what does GDP measure

A

the value of all final goods / services produced in an economy
economic growth

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2
Q

2.1.1 A)
methods of measuring GDP value economy

A

1) expenditure method - consumer expenditure + investment + government + spending + net trade ( export - import)
2) income method - wage + interest + profit + rent
should add to same value
income = output = expenditure

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3
Q

2.1.1 B)
distinction between
real and nomial

A

Real GDP
- taken inflation into account GDP ^10% , inflation ^6%
= real GDP ^4%
nominal
- value of goods and services in a year within an economy

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4
Q

2.1.1 B)
distinction between
total and per capita

A

Total GDP
- total value of goods and services in a year within an
economy
per capita
- takes population into account GDP / population used
to compare standard of living

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5
Q

2.1.1 B)
distinction between
value and volume

A

volume
- adding up the quantity of goods and services in a
year
value
calculating the value of all the goods and services produced in a year

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6
Q

2.1.1 C)
other national income measures

A

Gross National Income
Gross National Product

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7
Q

2.1.1 C)
what is gni

A

GDP + income into the countries by other countries interest / dividedness
(for countries w large foreign population who send money back home)

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8
Q

2.1.1 C)
what is gnp

A

value of goods / services produced by citizen regardless of location

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9
Q

2.1.1 D)
What should we do to compare rates of growth between countries over time

A

Use gdp [per capita
use real data over normal for fair comparison

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10
Q

2.1.1 E)
What does PPP stand for
and what is it used for

A

purchasing power parties
helps compare cost of living convert all to dollars
(Check Notes for example)

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11
Q

2.1.1 F)
What is the limitation of using GDP to compare standard of living

A

-GDP doesn’t include unofficial work / goodwill work
- increased in GDP doesn’t mean its shared equally doesn’t show increase standard of living
- GDP doesn’t take pollution , stress into account
- shadow economy

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12
Q

2.1.1 G)
What is national happiness used for

A

Used along side economic indicators to get a better idea of standard of living

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13
Q

2.1.1 G)
Key factors of UK national well being

A

GDP per capita
generosity
trust of absence of corruption
social support
perceived freedom
life expectancy

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14
Q

2.1.1 G)
relationship between real income and subjective happiness

A

Easterling paradox suggest life satisfactions does rice with income to a point where marginal gain derived from increase in income declines more money is needed for same increase in happiness

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15
Q

2.1.2 A)
What is inflation

A

Persistent increase in the general price level of prices over a period of time

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16
Q

2.1.2 A)
What is disinflation

A

falling rate of inflation, avg price ^ but to a slower rate , purchasing power v

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17
Q

2.1.2 A)
What is deflation

A

average price v, negative infation , prices are cheaper , purchasing power ^

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18
Q

2.1.2 B)
What is inflation rate

A

change in avg price in an economy in a period of time

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19
Q

2.1.2 B)
How can the UK calculate the rate of inflation

A

Consumer price index

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20
Q

2.1.2 B)
What are the steps of consumer price index

A

1) An expenditure survury
2)’consumer basket’ of most popular goods/servies with avg prices
3) prices are weighted based on % of income
4) weighted price are added to give the total weighted price of the basket
5) base year selected its given index value of 100
6)weighted basket converted into index number
7) % change calc done to work out annual inflation rates
8) basket updated annually

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21
Q

2.1.2 B)
index number calc

A

index number = (raw number / base year raw number) * 100

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22
Q

2.1.2 C)
Limitations of CPI

A

1) not fully representive for non typical households for example motering costs not appilied to houses w/o a car
2)spending patterns between people w/ w/o kids are diffrent
3) quality change in goods may rise the price not inflation
4) CPI slow to catch up to new products

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23
Q

2.1.2 D)
What is another measure of rate of inflation

A

rpi

24
Q

2.1.3 A)
Define unemployment

A

those who are willing and able to work but cannot find a job despite searching

25
Q

2.1.3 A)
What are the two measure of unemplyment

A

Claimant count & international labour org

26
Q

2.1.3 A)
Explain claimant count

A

Measures the nuber of people claiming job seekers allowerance.

Requirments are more extensive then ILO so oftem lower

27
Q

2.1.3 A)
Explain ILO

A

international labour org, and uk labour force suvery given to srandom sample of people if they fit the definiation of unemployment of ILO, can be inacc due to survery answers not 100% acc

ILO def - ready to work within two weeks and have activly looked for a job in the last month but cant find a job

28
Q

2.1.3 A)
ADV / DADV of Clamiant count

A

A) EZ & cost efft
D_ changing critera, claimers may not seek work due to getting money, underestimate of unemployment

29
Q

2.1.3 A)
ADV / DAVD of labour force survey / ILO

A

A) Allows for international comparision more acc
D) not representative of whole pop, Cost

30
Q

2.1.3 B)
Underemployment is ?

A

when currently working but they are overqualified wjere their skill set are not fully utilised or they are willing to work more hours.

31
Q

2.1.3 C)
Significasce of rate of employment

A

employment and unemployment can both rise

32
Q

2.1.3 C)
What is the classification for Economically inactive

A

Age 16-64
not activly looking for a job may be due to long term sickeness or lack of motivation.

Inactive not counted as unemployment doesnt represent the problem associated with ^ in inactivity

^ unemployment = ^ inactive as in short run not finding a job leads to unmotivation long term moving from unemployed to inactive

33
Q

2.1.3 )
Whats the labour force
Eq for unemployment

A

Employed + unemployed
unemployment = (# of unemployed / labour force )* 100

34
Q

2.1.3 )
Who can claim JSA ( Job seekers allowance)

A

working < 16 hrs
unemployed and seeking working
not enrolled in full time education

35
Q

2.1.3 D)
Explain structual unemployment

A

causes are geogpraphicwl immobility and occupated immobility

Geo - workers are unwilling to move in order to find work

opp - work either havibng no shifts or no longer needed

36
Q

2.1.3 D)
Explain fractional unemployment

A

occurs between the time workers are unemployed and find new work

policies like edu and careers advice cab reduce fractional.

seasonal - some jobs only adv in certian seasons

37
Q

2.1.3 D)
Explain demand deficency and cyclical unemployment

A

cyclical unemployment caused by v in AD as demand for labour dervies from demand for goods v dd = v employment.

leads to unemployment output to decrease and price to inc

notes for diagram

38
Q

2.1.3 D)
Explain real wage inflexability

A

fixing wages above the Equalibrum rate ( min wage )
results in supply of labour being more than demand . casuses exsess supply of labour aka unemployment
(Diagram in notes )

this is because fixed wages doesnt allow eq to be reached so full employment is unattainable

real wage unemployment is tge diff between dd and ss of labour

39
Q

2.1.3 E)
Significance of skills for employment

A

lack of skill impacts the ability of workers to switch field dependibg on needed and rate of employment

high rates of occupational unemployment cab cause unemployment and make long term jobs for ppl who dont get retrauned

40
Q

2.1.3 E)
Significance of migration for employment

A

migation causes expainsion in work force ^ ss of labour
migrates normally willing to work for less due to standards
low wage workers more effected

^ migrates = ^ demand for labour / goods

41
Q

2.1.3 F)
How are Consumers effected by unemployment

A

loss of income , v standard of living , ^ society issues (health, phy / mental )

42
Q

2.1.3 F)
How are firms effected by unemployment

A

V dd/ss = V revenue, however worker may will be willing to work for less due to lack of jobs and v on overall costs

43
Q

2.1.3 F)
How are workers effected by unemployment

A

^ levels of fractional unemployment makes ppl find the job right for them = ^ work time length and happniess, however if they lose their skills > long term unemployment. ineff for economy

44
Q

2.1.3 F)
How are gov effected by unemployment

A

v tax renenue. reduction in consumption, v in VAT have to spend more on welfare ^ national debt , ^ opp cost of production by unemployment

45
Q

2.1.3 F)
How are society effected by unemployment

A

^ crime and unhappniess, ^ neg externalties, unmotivated leads to econ unactive.

46
Q

2.1.4)
What is the balance of payment

A

A record of all financial dealings over a period of time between econmic agents of one country and all other countries

47
Q

2.1.4 A)
Components of the balance of payment

A

Current account , Financial & capital account

48
Q

2.1.4 A)
Whats Current account

A

Records payment for the purchase and sale of goods and servies

made up of
trade in goods - difference between visible exports and visible imports

trade in servies - invisible can be export or import

49
Q

2.1.4 A)
Whats financial & capital account

A

which records flow of money assicuated with saving investment specualtion and currency stabilsations

money in is + money out is -

50
Q

2.1.4 A)
Whats income and current transfer

A

Wages, intrest profit or dividends can be repatriated into the country

Ex; making money in one country sending it back to others, usually done by govt.

51
Q

2.1.4 A)
What are the two catorgories income and current transfer

A

Primary and secondary

52
Q

2.1.4 A)
What is the primary income and current transfer

A

result of loans of the factor of production aboard ( intrest profit dividenders)

53
Q

2.1.4 A)
What is the secondary income and current transfer

A

is a range mainly govt transfers to oversea org.

54
Q

2.1.4 B)
Whats a current deficits and surplus

A

surplus export > imports pos current balance
deficit import > export neg current balance

55
Q

2.1.4 C)
4 main marcoeconomic objects

A

low employment, low and stable inflation, economic growth and balance of payment eq

^ eg = current account = deficits as ^ import due to ^ dd

gov tends to want export led growth which causes eg high employment and improve the current account balance can cause inflation.

56
Q

2.1.4 D)
How does international trade affect interconnectedness

A
  • The proportion if output of an individual economy which is traded internationally is growing
  • many more people own assets in other countries such as shares, loans busniess
  • ^ migration
  • ^ technology

internatinal trade has meant countries have become interdependent so a change in the one country will affect another

Edexcel A Level Economics (21 decks)

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