macroeconomic objectives and measurements

Question 1

Define Economic Growth

Answer 1

The increase in the total output in an economy, adjusted for inflation

Question 2

Graph Long Run and Short Run growth

Answer 2

SR: AD or SRAS Shift Right
LR: LRAS Shift Right

Question 3

Define Inflation and Deflation

Answer 3

The rate of change in the price level, inflation if positive, deflation if negative.

Question 4

Give Examples (2)

How is inflation measured?

Answer 4

CPI, RPI, baskets of goods which track the level of prices in commonly purchased goods and services.

Question 5

How is Growth Measured

Answer 5

GDP, Real GDP, Green GDP

Question 6

How are living standards measured?

Answer 6

HDI, Inequality adjusted HDI

Question 7

List all Government macroeconomic objectives (6)

Answer 7

Maintain GDP growth,
inflation at 2% +- 1%
Reduce poverty and inequality
Improve the balance off trade
Maintain close to full employment
Reduce environmental degradation