The Measurement Of Macroeconomic Peformance Flashcards
(12 cards)
What is an economy?
The state of a country in terms of how many goods/services the country is producing and consuming.
What are the main macroeconomic objectives?
TIGERS:
Trade
Inflation
Growth
Employment
Redistribution of income
Stability
What are the UK governments main macroeconomic objectives?
Low unemployment - 80% employment target
Low inflation - 2% BOE target
Steadily increasing economic growth
Balance of Payments Equilibrium
What is Nominal GDP?
The total value of a countries output/GDP.
Used to measure economic growth/activity.
What is Real GDP?
The value of GDP adjusted to the current rate of inflation.
Nominal + current rate of inflation (More accurate)
What is GDP per Capita?
The total GDP divided by the number of people in a country.
Essentially the average output per person.
What is Gross National Income?
The aggregate income earned by all (British) nationals both domestically and abroad.
What is Gross National Product?
The value of all goods and services produced by (British) nationals across the world.
What is the Human Development Index?
An alternative way of measuring development including social and economic factors such as health, education and standard of living.
What is the formula for index numbers and why are they used.
( Actual year value / Base year value ) X 100
Represents the percentage increasing a price or quantity compared to a base value.
What are the advantages of using GDP to make economic comparisons?
Widely measured by most countries
Most countries provide quarterly data, making it easy to spot trends
What are the disadvantages of using GDP to make economic comparisons?
Black economy not accounted for
Income Inequality not accounted for
Ignores negative externalities
Foreign Direct Investment.
