The Measurement Of Macroeconomic Performance Flashcards
(18 cards)
What are the MEPOs?
- Economic growth
- Price stability
- Minimise unemployment
- Stable balance of payments on the current account
What is economic growth?
Economic growth refers to the increase in the total output of goods and services in an economy over time, measured by the growth rate of RGDP.
What is inflation?
The sustained increase in the general price level of goods & services in an economy over a period of time.
What is deflation?
Occurs when there is a fall in the average price level of good/services in an economy, as measured by the CPI
What is disinflation?
A slowdown in the annual rate of price inflation, prices are still rising but more slowly.
What is an unemployed person?
A person who does not have a job but is actively seeking work & is ready to begin work within two weeks.
What is the UK’s target for unemployment?
3%, accounting for frictional unemployment
What is the UK’s current unemployment rate?
4.4%
What is the UK’s current inflation rate?
2.8%
What is the UK’s target inflation rate?
2%
What are some government MEPO’s?
- Balancing the government budget; balancing state borrowing and income to minimise national debt
- Greater income equality
Conflicts of EG growth & other MEPOs?
- Environment (Kuznets curve)
- Inflationary effect
- Current account due to increased imports
- Government budget deficit
What is RGDP?
The value of all goods & services produced within an economy, adjusted for inflation, over a specific time period.
What is RGDP per capita?
It represents the total value of goods & services produced in an economy, adjusted for inflation, divided by the population
What is the Consumer price index (CPI)?
It tracks the change in price of a basket of goods & services that represent the typical spending patterns of households, used to track inflation
What is the Retail Price Index (RPI)?
A older price index which measures inflation, by tracking the average change in the cost of a basket of goods and services representative of what households typically spend their money on however it included housing costs like: mortgage interest payments, council tax & rent. CPI doesn’t include this.
