Measurement of Macro Performance

Question 1

GDP

Answer 1

Total value of goods and services produced in an economy

Question 2

Nominal GDP

Answer 2

GDP calculated without taking into account inflation

Question 3

Real GDP

Answer 3

GDP calculated taking into account inflation

Question 4

Consumer Price Index (CPI)

Answer 4

Measures changes in the prices of a ‘basket of representative goods’overtime. Doesn’t include housing costs.

Question 5

Retail Price Index (RPI)

Answer 5

Measures changes in the prices of a ‘basket of representative goods’overtime. Includes housing costs

Question 6

Purchasing Power Parity (PPP)

Answer 6

Economic theory, used to adjust GDP to account for different living standards across countries

Question 7

Major Macro Objectives

Answer 7

Economic growth
Low unemployment
Low inflation
Balance of Payments (+)

Question 8

Economically inactive

Answer 8

Everyone who is neither working nor looking for work

Question 9

Claimant count

Answer 9

Number of people claiming JSA (unemployment benefit) in a time frame