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Measuring Economic Performance Flashcards

(49 cards)

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1
Q

4 main macroeconomic indicators:Indicate…

A

Rate of eco growthRate of inflationLevel of unemploymentState of balance of paymentsGov uses to monitor how eco is doing

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2
Q

How is eco growth measured2 ways of measuring?Other ways?

A

GDP Change in national output (all g/s) over period/timeVolume = quant prod in 1 yearValue of all g/s in 1 yr = GDPY = O = E

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3
Q

Eco growth definition

A

Speed at which national output grows over period/time

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4
Q

RecessionDepression

A

Negative eco growth for 2 consecv quartersSustained eco downturn lasting long period/sev yrs

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5
Q

RecessionDepression

A

Negative eco growth for 2 consecv quartersSustained eco downturn lasting long period/sev yrs

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6
Q

Eco growth equation as %change

A

[Change in GDP ÷ Original GDP (£bills)] x 100

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7
Q

Real GDP (2)

A

Effect/% of inflation removedNominal GDP = misleading/GDP seems higher/not adjusted for infl

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8
Q

Measure standard of living equation(2)

A

Total GDP ÷ Pop. size = GDP per capitaGNI per capita = compare living stands between diff countriesGNI = GDP + net income from abroad (income earned by country on investment minus domestic foreigners’ income)

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9
Q

High GDP =High GNI per capita =

A

Strong eco performanceHigh stand of living

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10
Q

Using GDP to make comparisons - what are limitations (4)

A

Hidden economy/black barket - some eco activity wont appear in offc. figsPublic spending - some govs, more benefitsExtent of income inequality - 2 countries, sim. GDP but distribution of inc may be v diffOther = working conds/env. damg/spending needs e.g more inc spent on heating in cold countries to achieve same level of comf of warm places

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11
Q

Using GDP to make comparisons - what are limitations (4)

A

Hidden economy/black barket - some eco activity wont appear in offc. figsPublic spending - some govs, more benefitsExtent of income inequality - 2 countries, sim. GDP but distribution of inc may be v diffOther = working conds/env. damg/spending needs e.g more inc spent on heating in cold countries to achieve same level of comf of warm places

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12
Q

Index numbers represent?Useful?How do they work?

A

%changesUseful for making comps1st yr = base year, 100 + index no. moves up/down from there

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13
Q

Inflation definitionKeeping in mind that … (3)Inflation can be seen as? (-2)

A

Sustained rise in avg price of g/s over period of timeSome g/s prices may rise faster than othersSome prices rise more slowlySome £’s fallingFall in value of money:Fixed amount of money buys less than beforePurchasing power of money fallen

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14
Q

Types of inflation (3)

A

Deflation/neg inflation - prices fallingHyperinflation - prices rise extrm. quickly/money rapidly loses valueDisinflation - rate of inflation slowing down

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15
Q

2 measurements for inflation

A

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

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16
Q

RPI

A

2 surveys:1. Living Costs & Food Survey = finds out what people spend money on + what proportion of income = gives weighting/%2. Prices survey = measures changes in £ of ‘basket of goods’ from 1st survey/700 most commonly used g/s= Price changes multiplied by weightings & converted to index number

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17
Q

RPI (3+1)

A

2 surveys:1. Living Costs & Food Survey = finds out what people spend money on + what proportion of income = gives weighting/%2. Prices survey = measures changes in £ of ‘basket of goods’ from 1st survey/700 most commonly used g/s= Price changes multiplied by weightings & converted to index number

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18
Q

CPI

A

Mortgage interest payms excluded

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19
Q

CPI - differences: (3)Effect

A

Mortgage interest payms & council tax excludedDiff formLarge sample of popLower than RPI

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20
Q

RPI & CPI - Limitations: (4)

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A

RPI excludes households in top 4% incomesCPI = covers broader range of pop but doesn’t incl mortgage/council taxLiving Costs survey may be inacc infoBasket of goods only changes 1/yr = might miss some short-term chngs in spending habits

21
Q

RPI & CPI - Gov Policy (-4)

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A

Used to help determine wages & state benefits:Employers & trade unions use them a starting pt in wage negtsGov uses to decide on pension increases/other welfare benftsSome benefits = index-linked = rise autmclly by same %

22
Q

RPI & CPI - uses?

Study These Flashcards
A

Gov Policy - determine wages/benefits + measure changes in UK’s int competitiveness

23
Q

RPI & CPI - wages/benefits (-4)

Study These Flashcards
A

Used to help determine wages & state benefits:Employers & trade unions use them a starting pt in wage negtsGov uses to decide on pension increases/other welfare benftsSome benefits = index-linked = rise autmclly by same %

24
Q

RPI & CPI - int competitiveness (2)

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A

If CPI rate of inflation is higher than trading countries, then cost more of them = UK, less price competitive = Exports reduce & cheaper Imports (- domestic inflation) increase

25
RPI & CPI - int competitiveness (2)
If CPI rate of inflation is higher than trading countries, then cost more of them = UK, less price competitive = Exports reduce & cheaper Imports (- domestic inflation) increase
26
Unemployment definitionRate of unemployment?
Those willing/able to work at current wage rate but unable to find workRate = no. of people out of work as % of labour force
27
2 ways of measuring unemployment
Claimant CountLabour Force Survey
28
Claimant Count
No. of people claiming unemployment-related benefits/JSA
29
Labour Force Survey:
ILO International Labour Org uses sample of pop not working & asks if actively seeking work
30
Claimant Count advantages
Easy to obtain + no costUpdated monthly = always currentCan be manipulated gov to seem smaller e.g raising school leaving age to 19
31
Claimant Count advantages (2)Disadvantages (2)
Easy to obtain + no costUpdated monthly = always currentCan be manipulated gov to seem smaller e.g raising school leaving age to 19 = less ppl can claim JSA so looks like unemployment is fallingExcludes those looking for work but not eligible/choosing not to claim JSA
32
Labour Force Survey advantages (2)Disadvantages (3)
More accurate than claimantInternationally agreed measure for unempl = easier to compareExpensive to collect/put togetherLess up to date - way data's collectedSample may be unrep = inaccurate data
33
Unemployment Impact (4)
High rate = eco doing badlyUnemployment = lower incomes/less spending = companies sell less/cut prices/less profitUnused labour in eco = fewer g/s can be producedGov = extra costs - welfare benefits + less tax revenue
34
Balance of Payments
International flows of money - money flowing out e.g. tp pay for imports
35
Balance of Payments
International flows of money - money flowing out e.g. to pay for imports & money flowing in
36
4 sections to current account
Trade in goods/visible trade e.g. cars/foodTrade in services/invisible trade e.g. tourism/insuranceInternational flows of income earned as salaries/interest/profitsTransfers of money from one person/gov to another e.g. foreign aid/fam. member
37
Unbalanced Balance of Payments? (2)Usually?
More money flowing out = deficitMore money flowing in = surplusUsually deficit - surplus in invisible but large deficit in visible trade (not bad thing but could be sign that country = uncompetitive) = Gov wants to avoid long-term deficit
38
Measuring Development...
Rather than meas. growth/unemployment (dont tell full story), measuring eco development = ✓✓
39
Measuring Development...
Working out level of social & human welfare/quality of lifeRather than meas. growth/unemployment (dont tell full story), measuring eco development = ✓✓
40
Measuring Development...Unit?How?
Working out level of social & human welfare/quality of lifeHMIRather than meas. growth/unemployment (dont tell full story), measuring eco development = ✓✓Consider more indicators..esp when comp with LEDCs
41
HDI social indicators - 3Advs? (2)
Health - life expectancyEducation - avg/expected yrs in schoolStandard of living - real GNI per capitaStandard around worldEasy to collct
42
How is HDI used
Measure changes in dev levsCompare levels of dev between countriesAbove
43
How is HDI used (2)Number? (2)
Measure changes in dev levsCompare levels of dev between countriesCountries ranked or given as index Above 0.8 = high/below 0.5 = low
44
How is standard of living compared using HNI
Comparing GNI per capita = exchange rate might not reflect true worth of 2 currencies
45
How is standard of living compared using HNI (3)
Comparing GNI per capita betw diff currencies = exchange rate might not reflect true worth of 2 currencies= Measure GNI per capita using principle of purchasing power parity PPPSo GNI per capita of each county = adjusted to take into account of difference in purch.power = more acc. comparison
46
HDI criticisms
Life expectancy doesn't indicate quality of life e.g long working hours/poor air qualMeasuring avg no of years spent at school = doesnt measure qual of teaching/how well learnt
47
HDI criticisms
Life expectancy doesn't indicate quality of life e.g long working hours/poor air qualMeasuring avg no of years spent at school = doesnt measure qual of teaching/how well learntProbs with GNI per cap = inaccuracies e.g black market makes up larger prop of eco in LEDCsHDI doesnt measure extent of inequality
48
HDI criticisms (4)
Life expectancy doesn't indicate quality of life e.g long working hours/poor air qualMeasuring avg no of years spent at school = doesnt measure qual of teaching/how well learntProbs with GNI per cap = inaccuracies e.g black market makes up larger prop of eco in LEDCsHDI doesnt measure extent of inequality
49
Other ways of measuring development 1. (4)2. (4)3. (3)
Agriculture - %adlt m.labour in agricHard work/little payMore dev'd = more machinery= Higher % of pop in agri = low levs of eco devMobile phones per 1000Improve comm & trading = gr. ecodevLarge no. of mobile phones in country = indicates wages high enough for ppl to affordOthers = disease/maln/cl water access

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