4.2.1 Measurement Of Macroeconomic Performance Flashcards
(24 cards)
What are the main macroeconomic objectives?
- Economic growth
- Low unemployment
- Stable inflation
- Balance of payments
- Income distribution
- Economic stability
What does “every umbrella in Britain is essential” stand for?
- Economic growth
- Low unemployment
- Stable inflation
- Balance of payments
- Income distribution
- Economic stability
How is balance if payments calculated?
Exports-Imports=Balance of Payments
What is the GDP?
(Growth Domestic Product) amount spent on goods and services each year
What is a policy conflict?
Where macroeconomic objectives are incompatible. It may be that an action to improve performance in one area will damage another objective
What are lead indicators?
They provide information about the future state of the economy e.g surveys on consumer
What are log indicators?
They provide information about the past/ current economic performance e.g. data on unemployment
What are some indicators of a country?
- inflation rate
- unemployment rate
- GDP per capita
- people per doctor
- life expectancy
- % of people with qualifications
What is Economic growth?
A period of time when the output of an economy is increasing, shown by an increase in GDP
What is nominal GDP?
GDP measured at current market prices without the effects of inflation
What is real GDP?
A measure of all goods and services in an economy, adjusted for price change or inflation
What is GDP per capita?
GDP divided by population
What are index numbers?
A figure reflecting price or quantity compared with a base year. Base year is given a value of 100
How are index numbers calculated?
(Current price/base price)x100
What is price stability?
The constant fluctuation of prices due to inflation targeted at 2%
What is the target for unemployment?
3% to account for frictional unemployment
What are examples of policy conflicts that can occur?
- economic growth vs inflation
- economic growth vs the current account
- economic growth vs government budget deficit
- economic growth vs the environment
- unemployment vs inflation
How is inflation measured?
CPI or RPI
CPI= Consumer price index which measures household purchasing power with the family expenditure survey and from this a basket of goods is created
RPI= Retail price index same as CPI but includes house costs so tends to be higher
How is unemployment measured?
The claimant count- number of people claiming benefits
UK Labour Force Survey- must be out of work for 4 weeks, able to start work in two weeks and part time unemployment is counted
Whet is the balance of payments made up of?
- the current account
- the capital account
- the financial account
Positives of national income data
- can show improvements in living standards from higher economic growth
- shows trend output of an economy over time
- GDP per capita measures GDP per head
GNP
Gross National product
The market value of all products produced in a year by the labour and property supplied by the citizens of one country
GNI
Gross National Income
The sum of value added by all producers who reside in a nation
Limitations of National Income data
- doesn’t show distribution of wealth
- GDP may need to be recalculated in terms of purchasing power to be easier to compare
- there are large hidden economies such as the black market which aren’t included in GDP
- GDP gives no indication of welfare
