4.2.1.2 - macroeconomic indicators

Question 1

Define short run growth

Answer 1

the actual annual percentage change in real national output.

Question 2

Define long run growth

Answer 2

an increase in the potential productive capacity of the economy.

Question 3

Define macroeconomic indicators

Answer 3

a statistic used to represent the achievement of a macroeconomic objective

Question 4

List the 10
macroeconomic indicators

Answer 4

• real and nominal GDP
• GDP per capita
• CPI
• RPI
• Claimant count
• labour force survey
• productivity
• budget balance
• debt as a % of GDP
• balance of payments

Question 5

Define GDP

Answer 5

Gross Domestic Product: The value of goods/services producer in the economy over a period of time

Question 6

3 ways in which GDP is measured

Answer 6

• national expenditure
• national income
• national output

Question 7

Define national expenditure

Answer 7

consumption + Investment + government spending + net exports (exports - Imports)

Question 8

Define national income

Answer 8

Total of all incomes within an economy

Question 9

National output

Answer 9

The value of all outputs from the main economic sectors

Question 10

One strength of using real gross domestic product

Answer 10

The most accurate and reliable method of measuring macroeconomic performance

Question 11

Define norminal GDP

Answer 11

The value of goods and services produced in an economy expressed in monetary term(current prices). It doesn’t take into account inflation.

Question 12

Define real gross domestic product

Answer 12

the value of goods/services produced in the economy over
a period of time taking into account inflation

Question 13

Equation to calculate the real GDP

Answer 13

[ index of comparison period( base year) / index of current period ] x nominal value

Question 14

Why is GDP per capita useful

Answer 14

Allows comparisons to be made between countries in terms of the standard of living in each country.

Question 15

What is the difference between GDP measured by volume or by value.

Answer 15

Value: the monetary worth of the goods and services produced in a country
Volume: the quantity of goods and services produced in a country.

Question 16

What are the two calculations that measure inflation

Answer 16

• Consumer price index (CPI)
• The Retail Prices Index (RPI)

Question 17

How is CPI calculated

Answer 17

• a base year is selected and a survey on the average household spending habits is carried out
• a representative basket of goods is used which is reviewed each year to reflect consumer spending patterns.
• Weightsareattachedtoeachitembasedontheir importance in people’s spending
• allowing the rate of inflation to be calculated

Question 18

What is CPIH

Answer 18

The consumer price index plus housing costs
- it displays the level of inflation when including the amount you have to pay to rent a property ( costs and council tax)

Question 19

What is included in the RPI

Answer 19

• includes the factors of CPI plus mortgage interest repayments and council tax
• it excludes the top and bottom 4% of the country as they don’t represent the average household
• it tends to be a higher value than the CPI

Question 20

Why is RPI no longer used as frequently

Answer 20

• the mortgage payment figure began to distort the figure
• RPI has now been replaced by the CPIH

Question 21

How is unemployment measured

Answer 21

-Claimant Count
-The labour force survey

Question 22

How is the claimant count calculated

Answer 22

The number of people that receive welfare benefits for unemployment

Question 23

How is the labour force survey calculated

Answer 23

It is a figure based on a monthly survey of people who report that they are looking for work but cannot find it
- whether they receive benefits or not is irrelevant for this measure
- it is used to estimate the national unemployment level

Question 24

What does productivity measure

Answer 24

how efficiently production inputs (the factors of production) produce a given level of output

Question 25

What is the equation for productivity

Answer 25

- total output / no. Of units of input ( units of input include: labour, capital, hours etc.. )

Question 26

What is labour productivity

Answer 26

Measures the average output of each worker.

Question 27

What is capital productivity

Answer 27

Measures the efficiency of the machinery or equipment

Question 28

What’s is balance of payments

Answer 28

A record of a country’s trade and transactions with the rest of the world (imports and exports)

Question 29

What are the three sections to the balance of payments

Answer 29

- the current account - the financial account - the capital account

Question 30

Define the current account

Answer 30

Look at the net income flows of a country earned by either trade in goods/services, rewards from investment or international transfers.

Question 31

What is the balance of trade

Answer 31

Exports - imports

Question 32

What is a surplus and deficit of trade

Answer 32

Surplus = exports Greater than imports Deficit = exports Smaller than imports

Question 33

What is the uks balance of the trade of goods

Answer 33

- LARGE DEFICIT on the trade of goods, due to: - increase in demand for consumer goods that need to be imported - a decline in the uk manufacturing sector - lower production of primary materials such as gas and oil

Question 34

What is the measure of the trade in services in the uk

Answer 34

- LARGE SURPLUS on trade and services, due to: - shift towards tertiary sector employment, so specialise in the sector of services - the uk therefore is more competitive in the provision of these services, and can offer better services at a lower cost. - leads to a greater total revenue.