Measurements of Macroeconomic Performance- Macroeconomic indicators

Question 1

What does GDP measure?

Answer 1

The quantity of goods and services produced in an economy (national output)

A rise in economic growth indicates an increase in national output.

Question 2

What is Real GDP?

Answer 2

The value of GDP adjusted for inflation

For example, if the economy grew by 4% and inflation was 2%, real economic growth was 2%.

Question 3

How is Real GDP per capita calculated?

Answer 3

Real GDP divided by the population of the country

It measures the average output per person in an economy.

Question 4

What do CPI and RPI stand for?

Answer 4

Consumer Prices Index and Retail Prices Index

They are measures of inflation in the UK.

Question 5

What does the Consumer Prices Index (CPI) measure?

Answer 5

Household purchasing power using the Family Expenditure Survey

A basket of goods is created based on consumer spending.

Question 6

What is the main difference between CPI and RPI?

Answer 6

RPI includes housing costs, while CPI does not

This causes RPI to usually have a higher value than CPI.

Question 7

What is the Claimant Count?

Answer 7

The number of people claiming unemployment related benefits

Claimants must prove they are actively looking for work.

Question 8

What criteria does the International Labour Organisation (ILO) use for measuring unemployment?

Answer 8

1. Been out of work for 4 weeks
2. Able and willing to start working within 2 weeks
3. Available to work for 1 hour per week

Part-time unemployment is included.

Question 9

What is productivity defined as?

Answer 9

Output per worker per period of time

It measures production efficiency.

Question 10

How is labour productivity measured?

Answer 10

Output per hour

For example, in Q1 2015, it grew by 0.3%.

Question 11

What does the balance of payments on current account record?

Answer 11

All financial transactions between a country and other countries

It states how much is spent on imports and the value of exports.

Question 12

What are exports in the balance of payments?

Answer 12

Goods and services sold to foreign countries

They are positive in the balance of payments as they represent an inflow of money.

Question 13

What are imports in the balance of payments?

Answer 13

Goods and services bought from foreign countries

They are negative in the balance of payments as they represent an outflow of money.

Question 14

What components make up the balance of payments?

Answer 14

• The current account
• The capital account
• The official financing account

For the AS course, only the current account is focused on.

Question 15

What does the current account on the balance of payments focus on?

Answer 15

The balance of trade in goods and services

This is a key area of study for macroeconomic performance.