macro economic objectives and indicators Flashcards
(44 cards)
economic growth definition?
the change in national income measured over a period of time
(how much the value of the output produced in an economy has grown over a period of time)
What is price stability?
how fast the average level of prices of a range of goods and services rises over a period of one year
What are the macroeconomic objectives?
- economic growth
- price stability
- minimising unemployment
- stable balance of payments on current account
what is a policy conflict?
- attempts to achieve one economic objective move us further away from another economic objective
Give examples of policy conflicts?
minimising unemployment and achieving price stability.
- reducing unemployment often comes at the expense of prices rising
What is GDP?
- gross domestic product - measure of the national income of the economy. Based on the value of all incomes earned in the economy over a period of time
What does real GDP measure?
the value of GDP after adding the effect of price changes (inflation)
What is normal GDP growth per year?
2% and 3%
What is real GDP used for ?
comparison between countries in terms of standard of living
How is real GDP per capita calculated?
real GDP / population level
What does per capita mean?
a variable adjusted to give an average amount per person
What do CPI and RPI measure?
measure of price level which records rate of inflation
How do the CPI and RPI help measure inflation?
they measure the prices of goods and services typicaly bought by households in the UK
What does unemployment mean?
those of working age who are currently out of work but are actively seeking work
What is the labour force?
those of working who are either in work or actively seeking work
What are the UKs two main measures of unemployment?
- claimant count
- labour force survery
What is the claimant count?
the measure of unemployment in the UK that counts those who are recieving unemployment benefits
What is the labour force survey?
based on a monthly sample of people, records those who report they are looking for work but cannot find it, regardless of benefits
What is the unemployment rate?
the number of unemployed people expressed as a percentage of the current labour force
How do you calculate unemployment rate?
number of people unemployed / size of labour force x100
What does productivity measure?
a measure of efficiency comparing the level of output with the level of inputs
What is labour productivity?
the output of the workforce compared with the amount of labour used to produce the output
What is capital productivity>
the output per item of capital equipment measured over a period of time
What does economic growth in the long run involve?
comes from improvements in productivity
