Macroeconomic indicators Flashcards
(31 cards)
What does GDP measure?
The quantity of goods and services produced in an economy
GDP stands for Gross Domestic Product.
What does a rise in economic growth indicate?
An increase in national output
Economic growth is often measured by changes in GDP.
What is Real GDP?
The value of GDP adjusted for inflation
Real GDP provides a more accurate reflection of an economy’s size and how it’s growing over time.
If the economy grew by 4% and inflation was 2%, what was the real economic growth?
2%
Real economic growth is calculated by subtracting the inflation rate from the nominal growth rate.
What is Real GDP per capita?
The value of real GDP divided by the population of the country
What does ‘capita’ mean in the context of Real GDP per capita?
It means ‘head’, referring to per person in an economy
Why is Real GDP per capita useful?
It is useful for comparing the relative performance of countries
What are CPI and RPI?
Measures of inflation in the UK
What does the Consumer Prices Index (CPI) measure?
Household purchasing power
What survey is used to determine CPI?
Family Expenditure Survey
What is created from the Family Expenditure Survey for CPI?
A basket of goods
How are goods weighted in the CPI basket?
According to how much income is spent on each item
Which item has a higher weighting in the CPI basket: petrol or tea?
Petrol
How often is the CPI basket updated?
Each year
What does the Retail Prices Index (RPI) include that CPI does not?
Housing costs
Name two housing costs included in RPI.
- Payments on mortgage interest
- Council tax
Why does RPI tend to have a higher value than CPI?
Because RPI includes housing costs
What is a challenge in accurately measuring unemployment?
Some employed individuals might claim unemployment-related benefits while some unemployed might not reveal this in a survey
This highlights the complexity of gathering reliable data on unemployment rates.
What might employed individuals do that affects unemployment measurement?
Claim unemployment-related benefits
This can lead to discrepancies in official unemployment statistics.
What might some unemployed individuals fail to do during surveys?
Reveal their unemployment status
This non-disclosure can skew the accuracy of unemployment data.
What is the Claimant Count?
The number of people claiming unemployment related benefits, such as Job Seeker’s Allowance (JSA)
Claimants must prove they are actively looking for work.
What does the International Labour Organisation (ILO) use to measure unemployment in the UK?
The UK Labour Force Survey (LFS)
The LFS includes direct questioning about unemployment criteria.
What are the criteria for the International Labour Organisation (ILO) unemployment measurement?
People must meet the following criteria:
* Been out of work for 4 weeks
* Able and willing to start working within 2 weeks
* Available for 1 hour per week
Part-time unemployment is included.
