2.1 Measures of Economic Performance

Question 1

Difference between real and nominal GDP

Answer 1

Real GDP is adjusted to inflation whereas nominal has no adjustments

Question 2

Inflation definition and UK target

Answer 2

general rise in prices of g/s in an economy
2%

Question 3

Limits of using GDP for comparisons 3

Answer 3

no info on inequality
no info on quality of g/s
no info on environmental factors

Question 4

Deflation definition

Answer 4

Fall in the price levels

Question 5

Disinflation

Answer 5

Inflation at a slower rate

Question 6

What is CPI

Answer 6

Consumer price index -a basket of g/s from the average household

Question 7

2 causes of inflation

Answer 7

Demand pull inflation
Cost push inflation

Question 8

What causes demand pull inflation

Answer 8

excess demand in the economy

Question 9

What causes cost push inflation

Answer 9

Increasing cost of production
Fall in productivity

Question 10

2 main measures of unemployment

Answer 10

Labour force survey (ILO) and the Claimant count

Question 11

What is the Claimant Count

Answer 11

Amount of people claiming unemployment related benefits eg JSA

Question 12

What is the ILO

Answer 12

survey sent to 60k people who determine their employment status

Question 13

Underemployed meaning

Answer 13

Overqualified in their job or wanting to work more hours

Question 14

4 main causes of unemployment

Answer 14

Structural
Cyclical
Seasonal
Frictional

Question 15

Structural unemployment definition

Answer 15

When there is no longer a need for a specific job in the economy

Question 16

Cyclical unemployment definition

Answer 16

fall in demand in an economy
as output falls , firms will lay off workers

Question 17

Seasonal unemployment definition

Answer 17

When a job is not required during a certain season eg. ice cream men, fruit pickers

Question 18

Frictional unemployment definition

Answer 18

time taken to move between jobs
short term

Question 19

balance of payments and its sections

Answer 19

All financial transactions between a country and the rest of the world

Question 20

Current Account

Answer 20

transactions of g/s

Question 21

Financial/capital account

Answer 21

all transactions related to saving/investment and currency

Question 22

How to fix a current account deficit

Answer 22

Raise tariffs->less imports-> higher AD
- firms who rely on imported raw materials will have higher cost of production-> higher prices for consumers