2.1 Measures of economic performance

Question 1

What are 2 measures of unemployment? (2)

Answer 1

The claimant count
The ILO Labour force survey

Question 2

If someone is unemployed what are they?

Answer 2

Willing and able to work but not employed

Question 3

If someone is underemployed what are they? (2)

Answer 3

Someone with a job but their labour is not being used to its fullest potential
People working part-time looking for a full time job

Question 4

If someone is inactive what are they? (2)

Answer 4

Someone not actively looking for a job
Some who is not economically active

Question 5

What is an example of someone who is not economically active? (3)

Answer 5

Children
The disabled
Pensioners

Question 6

What are the 5 causes of unemployment? (5)

Answer 6

Structural
Cyclical
Frictional
Seasonal
Real wage inflexibility

Question 7

What is structural unemployment? (2)

Answer 7

Skills becoming obsolete
Industries in decline of workers

Question 8

What is cyclical unemployment?

Answer 8

Due to a lack of spending in the economy workers are made redundant

Question 9

What is frictional unemployment?

Answer 9

When workers are between jobs

Question 10

What is Seasonal unemployment?

Answer 10

When workers are out of work for periods in the year

Question 11

What is real wage unemployment?

Answer 11

When there are issues with the supply side of labour

Question 12

What is real world example of structural unemployment?

Answer 12

People operating horse drawn carriages

Question 13

What is an example of cyclical unemployment?

Answer 13

People loosing their jobs in a recession?

Question 14

What is an example of an occupation which would see seasonal unemployment?

Answer 14

Ski instructors, Ice cream man…..

Question 15

What is reason that real wage unemployment might occur?

Answer 15

Because the minimum wage is too high

Question 16

What happens to the supply of labour when migrants enter the economy?

Answer 16

the supply of labour increases

Question 17

What is hysteresis? (2)

Answer 17

When workers are unemployed for a long time are likely to loose their skills
Workers are less motivated to work

Question 18

What is inflation?

Answer 18

An increase of the general price of goods overtime

Question 19

What is deflation?

Answer 19

A decrease in the general price of goods overtime

Question 20

What happens to the cost of living when inflation occurs?

Answer 20

The cost of living rises

Question 21

What happens to the purchasing power of money when inflation occurs?

Answer 21

The purchasing power of money decreases

Question 22

What is disinflation?

Answer 22

A falling rate of inflation

Question 23

Are prices still rising when disinflation is occurring?

Answer 23

Prices are still rising but just slower

Question 24

What is happening to the purchasing power of money when disinflation is occurring?

Answer 24

The purchasing power of money is increasing

Question 25

What are two methods of calculating inflation? (2)

Answer 25

The Consumer price index (CPI) and the Retail price index (RPI)

Question 26

What does CPI measure?

Answer 26

Household purchasing power

Question 27

How is the data used to calculate CPI collected?

Answer 27

A survey (the family expenditure survey)

Question 28

The family expenditure survey finds out what ..... spend their ...... on, to create the ..... of .....

Answer 28

The family expenditure survey finds out what consumers spend their income on, to create the basket of goods

Question 29

Goods in the basket of goods are ..... based on how much ...... is spent on the good

Answer 29

Goods in the basket of goods are weighted based on how much income is spent on the good

Question 30

What is an example of a good which has a higher weighting in the basket of goods?

Answer 30

Petrol, energy

Question 31

The basket of goods only represents the goods for .....

Answer 31

the average household

Question 32

Different demographics have different ......

Answer 32

Spending patterns

Question 33

CPI responds to new goods and services ...... , even when .......

Answer 33

Slowly , updated regularly

Question 34

Its difficult to compare historical CPI data due to .......

Answer 34

Changes in technology

Question 35

How is the Retail price index, RPI, different to the CPI? (2)

Answer 35

It includes housing costs and payments on mortgage interest

Question 36

RPI usually has higher values than .....

Answer 36

CPI

Question 37

Who does RPI exclude? (2)

Answer 37

The top 4% of earners Low income pensioners

Question 38

When prices rise what does CPI do that RPI doesn't?

Answer 38

It considers that consumers switch to cheaper goods

Question 39

What are three types of inflation? (3)

Answer 39

Demand pull Cost push Growth in the money supply

Question 40

What does demand pull inflation mean?

Answer 40

Inflation occurs due to an increase in AD

Question 41

What does cost push inflation mean?

Answer 41

Inflation occurs due to firms facing rising costs

Question 42

What is GDP?

Answer 42

The total value of goods and services produced in a country overtime

Question 43

What can GDP be used as an indicator for?

Answer 43

The standard of living in a country

Question 44

What does total GDP represent?

Answer 44

The GDP for the whole country

Question 45

What is GDP per capita?

Answer 45

Total GDP divided by the number of people in the country

Question 46

What is real GDP?

Answer 46

Is GDP but inflation is taken into account (taken out)

Question 47

What is nominal GDP?

Answer 47

GDP but inflation is left in

Question 48

What can real values be described as?

Answer 48

The volume of national income

Question 49

What can nominal values be described as?

Answer 49

The value of national income

Question 50

What is economic growth?

Answer 50

The rate of change of output

Question 51

What is GNI?

Answer 51

The value of goods and services produced by a country overtime