3.2.1 the measures of macroeconomic performance

Question 1

How is economic growth measured?

Answer 1

Economic growth is measured via GDP

Question 2

What is GDP?

Answer 2

GDP is gross domestic product which is the total value of goods and services within 1 year.

Question 3

what is Inflation?

Answer 3

Inflation is the increase in general price level overtime measured by CPI- consumer price index

Question 4

What is the target inflation rate in the UK?

Answer 4

the target inflation rate in the UK is 2%

Question 5

What are balance of payments?

Answer 5

Balance of payments is where imports and export rates are roughly matched. We do not want big trade deficit and we don’t want current account deficit

Question 6

What are some key Macroeconomic indicators?

Answer 6

-Growth of real GDP
-Real GDP per capita (Nominal GD- Inflation/ Population)
-Annual rate of consumer price inflation
-Unemployment rate
-balance of trade in goods and services
-Government borrowing and national debt
-monetary policy interest rates
-labour productivity

Question 7

What are the Governments 4 key Macroeconomic objectives?

Answer 7

-Economic growth
-Full employment
-Stable Inflation
-Balance of Payment’s

Question 8

What is SR economic growth?

Answer 8

• Short run economic growth is Growth of real output from using idle resources , taking up slack from the economy

Question 9

What is LR economic growth?

Answer 9

-Long run economic growth is an increase in the economy’s potential level of real output, produced in the economy over a period of time.

Question 10

What is real GDP?

Answer 10

-A measure of all goods produced in the economy adjusted for inflation

Question 11

What is Nominal GDP?

Answer 11

-Nominal GDP is is GDP measured at the current market price without removing the effects of inflation.

Question 12

What is a PPF?

Answer 12

• PPF is the production possibility frontier in which the growth is always measured in real GDP

Question 13

What are Index numbers?

Answer 13

Index numbers are a simple statistical technique economists use for comparing value of variable in one period or location with a base observation which is always labelled 100.;

Question 14

what is the equation for index numbers?

Answer 14

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

Question 15

what is the equation for percentage change?

Answer 15

percentage change =change/original *100