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Economics Theme 2 Key Terms > 2.1 Measures of Economic Performance > Flashcards

2.1 Measures of Economic Performance Flashcards

1
Q

Economic Growth

A

Measures the rate of change in a country’s output (1). An expansion of the productive potential of an economy (1)

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2
Q

Short-run economic growth

A

The actual annual percentage change in real national output (real GDP)

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3
Q

Long-run economic growth

A

An increase in the potential productive capacity of the economy

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4
Q

Gross Domestic Product (GDP)

A

The value of the quantity of goods and services produced in the economy (1) over a period of time (1)

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5
Q

Real GDP

A

The value of the quantity of goods and services produced in the economy over a period of time (1) adjusted for inflation (1)

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6
Q

Nominal GDP

A

The value of the quantity of goods and services produced in the economy over a period of time (1) not adjusted for inflation (1)

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7
Q

GDP per capita

A

The value of total GDP divided by the population of the country

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8
Q

Total national income

A

The value of all goods and services produced in an economy

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9
Q

Per capita income

A

The total income divided by the population

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10
Q

GDP: Volume

A

Considers the quantity of goods and services produced within an economy

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11
Q

GDP: Value

A

considers the monetary worth of the goods and services produced within an economy

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12
Q

Gross National Product (GNP)

A

The value of all goods and services produced by domestic businesses both at home and abroad this includes overseas assets

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13
Q

Gross National Income (GNI)

A

GDP plus income paid into the country by other countries for things such as interest and dividends

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14
Q

Purchasing Power Parities (PPP)

A

A method that allows us to look at the relative value of different currencies
it takes real GDP and divides it by the number of people within the country
it then converts the income into dollars to allow a comparison between all countries around the world

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15
Q

Happiness Economics

A

A fairly new branch of economics that looks at how content individuals are with their life from a theoretical and scientific viewpoint

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16
Q

Inflation

A

A sustained rise in the general price level within an economy (1) in a given time period (1) (usually a year)

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17
Q

Inflation rate

A

A sustained rise in the general price level within a given time period expressed as a percentage

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18
Q

Consumer price index (CPI)

A

Measures household purchasing power with the family expenditure survey
This is done by the ONS (Office for national statistics)
The survey finds out what consumers spend their income on from this a basket of goods is created (700 items)
The goods in the basket are weighted according to how much income is spent on each item

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19
Q

Retail price index (RPI)

A

Alternative measure of inflation (unlike CPI) RPI included housing costs (payment on mortgage interest and council tax

20
Q

Index numbers

A

Index numbers are a useful way of expressing economic data time series and comparing/contrasting information

21
Q

Formula for index numbers

A

Index number in Year Y = (data value in year Y/Base Year Value) x 100

22
Q

Demand-pull inflation

A

A sustained rise in the general price level caused by excessive (aggregate) demand in an economy for goods and services

23
Q

Cost-push inflation

A

A sustained rise in the general price level caused by firms responding to rising costs of production by increasing prices of output

24
Q

Money Supply

A

A measure of the amount of stock of money in the economy

25
Q

M0: Narrow Money

A

includes notes and coins in circulation

26
Q

M4: broad money

A

includes M0 (notes and coins) bank deposits and other liquid assets

27
Q

Deflation

A

A decrease in the general price level within an economy over a given time period

28
Q

Disinflation

A

When the inflation rate is falling but is still positive e.g. falling from 4% to 2%

29
Q

Shoe leather costs

A

Due to distorted price signals individuals shop around it is the cost of looking around to fin a cheaper price/best rate of interest

30
Q

Fiscal Drag

A

Wages rise in line with inflation and an individual is dragged into a higher tax bracket therefore increasing government tax revenue without altering tax brackets

31
Q

Menu Costs

A

Due to fluctuating prices the firm must print new labels and therefore increases their costs

32
Q

Economically inactive

A

People of working age who are not seeking work for whatever reason e.g. wealth, discouragement, disability

33
Q

Unemployment

A

Those who are willing and able to work but are not employed they are actively seeking work and usually looking to start within the next two weeks

34
Q

Unemployment Level

A

The number of people who are unemployed

35
Q

Unemployment rate

A

the number of people who are unemployed expressed as a % of the labour force

36
Q

The Claimant Count

A

This counts the number of people claiming unemployment related benefits such as Job Seeker’s allowance (JSA) they have to prove they are actively looking for work

37
Q

Labour Force Survey

A

Quarterly survey of approximately 60,000 households compiled by the ONS (Office for National Statistics) studying the employment circumstances of the UK population

38
Q

Underemployment

A

occurs when workers cannot find a job that is suitable for their qualifications and experience or who cannot find enough hours to work

39
Q

structural unemployment

A

occurs with a long term decline in demand for the goods and services in a particular industry leading to job losses

40
Q

Geographical immobility of labour

A

Refers to barriers to people moving from one area to another to find work
examples include Family, culture ,language barriers and variation in house prices

41
Q

Occupational immobility of labour

A

workers may have specific skills that are not necessarily needed in growing industries which causes a mismatch between the skill on offer from the unemployed and those required by employers looking for workers

42
Q

Frictional unemployment

A

Transitional unemployment that occurs as workers move between jobs mainly through career changes or geographical changes

43
Q

Seasonal unemployment

A

Occurs when workers are unemployed at different times of the year

44
Q

Cyclical (Demand-deficient) unemployment

A

Caused by a lack of demand for goods and services and it usually occurs during periods of economic decline or recessions (when there is a negative output gap)

45
Q

Real-wage inflexibility (classical) unemployment

A

occurs when real wage rates are above equilibrium wage rate causing the supply of labour to be greater than the demand for labour

46
Q

Net migration

A

The difference between emigration (those leaving the UK) and immigration (those entering the UK)

47
Q

Full employment

A

When the number of job vacancies equal the number of people actively seeking work

Economics Theme 2 Key Terms (1 decks)

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