Macroeconomic Indicators

Question 1

What are Macroeconomic Indicators?

Answer 1

Data used to measure the performance of an economy, like real GDP, GDP per capita, CPI and RPI, measures of unemployment, productivity and the balance of payments on current account

Question 2

What is GDP?

Answer 2

A measure of national income of an economy. It is based the value of all incomes earned in an economy over a period of time

Question 3

What is real GDP?

Answer 3

Measures the value of GDP after removing the effect of price changes from its value. This ensures that an increase in GDP from one year to the next represents increased output of goods and services rather than just increases in prices

Question 4

What rates does the government encourage?

Answer 4

Usually between 2-3%

Positive ^

Question 5

What is real GDP often used for?

Answer 5

To make comparisons of SOL between countries

Question 6

What makes comparisons more meaningful?

Answer 6

The average income per person- Real GDP per capita

Question 7

How is real GDP per capita calculated?

Answer 7

Real GDP/population level

Question 8

How is Economic Growth measured?

Answer 8

Gross Domestic Product (GDP) or GDP per capita

Question 9

How is Unemployment measured?

Answer 9

As ‘level’ or ‘rate’

Question 10

How is Inflation measured?

Answer 10

Using Consumer Price Index (CPI) or Retail Price Index (RPI)

Question 11

How is the balance of payments measured?

Answer 11

The value of net exports

Question 12

What does the Economic Cycle Diagram look like?

Answer 12

Includes Boom, Recession, Growth and Slack

Question 13

What is the Trend Rate of Growth?

Answer 13

The underlying rate of growth

Determined by the rate of growth of productive potential

Question 14

What is the Positive Output Gap?

Answer 14

When the economy temporarily grows faster than trend rate

Question 15

What is the Negative Output Gap?

Answer 15

When the aggregate demand is growing at a slower rate

Question 16

What is the definition of CPI/RPI?

Answer 16

The rate of change of the average price level over time or a sustained increase in the general price level

Question 17

What causes Inflation?

Answer 17

Demand-Pull or Cost-Push

Question 18

What is the Basket of Goods and Services?

Answer 18

The ‘shopping basket’ of items used in compiling the various measures of consumer price inflation are reviewed each year

Question 19

How do we measure Uneployment?

Answer 19

Labour Force Survey and the Claimant Count

Question 20

What is the Claimant Count (CC)?

Answer 20

Includes the number of people receiving welfare benefits for being unemployed. The usual benefit received by those unemployed is jobseekers allowance (JSA)

Question 21

What is the Labour Force Survey (LFS)?

Answer 21

Based on a monthly sample of people, it records those who report they are looking for work but cannot find it, regardless of whether they receive benefits or not.

Question 22

What are the types of Unemployment?

Answer 22

Cyclical, Structural, Frictional, Seasonal, Technological, Regional

Question 23

What are the causes of Unemployment?

Answer 23

Lack of Aggregate Demand, labour immobility, unemployment trap

Question 24

What is Aggregate Demand?

Answer 24

Known as demand deficit or cyclical unemployment

The demand for labour is derived, so a lack of demand for goods and services leads to a lack of demand for labour

Question 25

What is Structural Unemployment?

Answer 25

When there is a difference in characteristics workers have

Question 26

What is Frictional Unemployment?

Answer 26

The period of time when a worker is moving between jobs

Question 27

What is Seasonal Unemployment?

Answer 27

Unemployment that occurs through seasonal fluctuations in demand throughout the year

Question 28

What is Technological Unemployment?

Answer 28

Created through the increasing degree of automation in the production process

Question 29

What is Regional Unemployment?

Answer 29

Typically linked to structural unemployment, a situation where a town or region experiences a downturn

Question 30

What are consequences of Unemployment for individuals?

Answer 30

``` De-skilling Lower living standards Health Social Unemployment trap Longer term employability ```

Question 31

What are the consequences of Unemployment for the Economy?

Answer 31

``` Government finances Lost output Rising inequality Loss of resources invested in training Lower consumer spending ```

Question 32

What are the forms productivity?

Answer 32

Labour- is per worker Capital- output per unit of capital Factor- average output of all factors of production

Question 33

What is the Current Account?

Answer 33

- Primarily records the trade in goods i.e. visibles and services i.e. invisibles - Also includes net income flows from interest, profit and dividends from UK assets owned overseas. It therefore includes payments made overseas from assets based in the UK, but owned by foreign MNCs - Includes overseas aid payments and payments to the European Union

Question 34

What is the Capital Account?

Answer 34

Primarily records international flows of capital such as inter-country loans or government investments overseas

Question 35

What is the Financial Account?

Answer 35

- Primarily records net Foreign Direct Investment (FDI) - Also includes government owned assets such as gold, currency reserves and private assets held abroad It will also include short-term capital flows, such as speculative movements on currency or share investments e.g. hot money

Question 36

What does the Balance of Payment include?

Answer 36

The Current Account, Capital Account and The Financial Account