Economic Growth

Question 1

Big mac index

Answer 1

The Big Mac index is a way of measuring Purchasing Power Parity (PPP) between different countries. By converting the average national Big Mac prices to U.S. dollars (S) the same goods can be informally compared. This can tell us something about whether a currency is under or overvalued in foreign exchange markets.

Question 2

BRICS

Answer 2

The BRICS grouping – Brazil, Russia, India, China and South Africa – short-hand for the rise of emerging markets. The BRICs have a bigger share of world trade than the USA.

Question 3

Constant price

Answer 3

Constant prices tell us that the data has been inflation adjusted.

Question 4

Economic cycle

Answer 4

Variations in the annual rate of growth of real national output (GDP) over time.

Question 5

Economic development

Answer 5

Long run improvements in broad measures of income per capita, education and health outcomes and reductions in extreme poverty, hardship and inequality.

Question 6

Economic growth

Answer 6

An increase in the real value of goods and services produced as measured by the annual % change in real GDP. Also, a long-run increase in a country’s productive capacity.

Question 7

Economic shocks

Answer 7

Unpredictable events such as volatile global prices for oil, gas and foodstuffs.

Question 8

Economic stability

Answer 8

When growth, prices and unemployment do not change much from one year to another.

Question 9

Emerging markets

Answer 9

Term commonly used to describe the financial markets of developing countries.

Question 10

Full capacity output

Answer 10

Level of GDP where all available factor inputs are fully employed.

Question 11

Globalisation

Answer 11

A process in which countries have become increasingly integrated and inter-dependent.

Question 12

GNI

Answer 12

Income generated from resources owned by inhabitants and businesses of a country.

Question 13

Green GDP

Answer 13

A popular term for environmentally adjusted gross domestic product.

Question 14

Gross domestic product (GDP)

Answer 14

Total monetary value of output, spending and factor incomes generated within the geographical boundaries of a country in a given time period.

Question 15

GDP per capita

Answer 15

National income per head of population, used as a baseline measure of living standards, measured by total GDP/resident population.

Question 16

Human Development Index (HDI)

Answer 16

An index used to assess comparative levels of development in countries, quantified in terms of literacy, life expectancy and purchasing power as measured by real national income per capita (PPP adjusted).

Question 17

Infrastructure

Answer 17

The transport links, communications networks, sewage systems, energy plants and other facilities essential for the efficient functioning of a country and its economy.

Question 18

Lagging indicators

Answer 18

Indicators which tend to follow economic cycles e.g. unemployment.

Question 19

Leading indicators

Answer 19

Indicators which predict future economic trends e.g. consumer confidence.

Question 20

Macroeconomic performance

Answer 20

The overall performance measured by changes in output, investment, prices, jobs, trade and living standards and also the distribution of income and wealth.

Question 21

Manufacturing

Answer 21

Manufacturing is one of the production industries, which also include mining, electricity, water & waste management and oil & gas extraction. In 2019, the UK manufacturing sector accounted for 2.7 million jobs,11% of total UK GDP.

Question 22

National happiness

Answer 22

Societal and personal well-being looking beyond what an economy produces, to areas such as health, relationships, education and skills, housing quality, finances and the environment.

Question 23

National income

Answer 23

The total income earned by all factors of production in an economy in a given time frame.

Question 24

Nominal GDP

Answer 24

Monetary value of all goods and services produced expressed at current prices (i.e. unadjusted for the effects of inflation).

Question 25

Nominal income

Answer 25

The level of income in a given time period (e.g. a year) which is unadjusted for the effects of inflation, also known as money income.

Question 26

Per capita income

Answer 26

Income per head of the population – a measure of average living standards e.g. Gross national income per capita = GNI/total population.

Question 27

Purchasing power

Answer 27

The buying power of a unit of currency. It is inversely related to the rate of inflation.

Question 28

Purchasing power parity

Answer 28

PPP is an economic theory that compares different countries’ currencies through a “basket of goods” approach. According to this concept, two currencies are in equilibrium—known as the currencies being at par— when a basket of goods is priced the same in both countries, taking into account the exchange rates. Your purchasing power is the same in this situation.

Question 29

Real disposable income

Answer 29

Income after taxes and welfare benefits, adjusted for the effects of inflation.

Question 30

Real GDP

Answer 30

Nominal GDP adjusted for price changes, expressed at constant prices.

Question 31

Real income

Answer 31

Nominal income adjusted for price changes, expressed at constant prices.

Question 32

Real income per capita

Answer 32

Real value of household income per head of population = real GDP divided by the resident population.

Question 33

Service industries

Answer 33

The service industries include the retail sector, the financial sector, the public sector, business administration and cultural activities. In 2019, the service industries accounted for 80% of total UK GDP and accounted for 83% of jobs.