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Economics > Theme 2.1 Measures of economic performance > Flashcards

Theme 2.1 Measures of economic performance Flashcards

1
Q

What is economic growth

A

The rate of change of output and an increase in the long

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2
Q

How is economic growth measured

A

the percentage change in real GDP per annum

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3
Q

What is GDP a indicator of?

A

the standard of living in a country

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4
Q

What is total GDP

A

The overall GDP for the country

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5
Q

What is GDP per capita

A

The total GDP divided by the number of people in a country

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6
Q

What are real values

A

the volume of national income

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7
Q

What are nominal values

A

the value of the national income

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8
Q

How do you work out nominal GDP

A

the price x the quantity

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9
Q

What is gross national income (GNI)

A

The value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends

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10
Q

What is gross national product (GNP)

A

The value of goods and services over a period of time through labour or property supplied by citizens of a country both domestically and overseas

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11
Q

What are the two ways you can make comparisons about growth

A

over time and between countries

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12
Q

How do you compare growth over time

A

change in national income level over different years

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13
Q

How do you compare growth between countries

A

You compare the GDP per capita as different countries have different population sizes

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14
Q

How are exchange rates used to compare counties

A

Exchange rates are used

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15
Q

What are the problems with GDP

A
  • black market
  • home produced services
  • errors in calculating
  • methods of calculate GDP will change
  • take away transfer payments
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16
Q

What is the Easterlin paradox

A

if you are poor and your income increases your happiness will also increase. However if your income increases when you’re rich won’t necessarily make you happy

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17
Q

What are examples of happiness indexes

A
  • Happy planet index
  • Genuine progress indicator
  • OECD better life index
  • Human development index
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18
Q

What is inflation

A

The general increase of prices in the economy which erodes the purchasing power of money

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19
Q

What is deflation

A

The fall of prices and indicated a slowdown in the rate of growth of the output in the economy

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20
Q

What are the two indices

A

Retail price index and Consumer price index

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21
Q

What is the consumer price index

A

Collects prices on a list of goods and services. All of these prices are combined.

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22
Q

What are the limitations of CPI

A
  • not totally representative
  • It does not include the price of housing
  • difficult to make comparisons with historical data
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23
Q

What is RPI

A

Very similar to CPI but:
- includes housing costs
- only includes to average households

24
Q

What is demand pull inflation

A

A shift in the aggregate demand curve will cause either inflation or deflation based on the shift

25
Q

What is cost push inflation

A

A shift in the aggregate supply curve will cause prices to rise (right shift) or fall (left shift).

26
Q

What is the growth of money supply

A

There is too much money in economy. If people have access to money they will want to spend it however it means prices will rise

27
Q

What is the effect of inflation on consumers

A
  • if incomes don’t increase with inflation they have less to spend
  • psychological effects
  • easier to pay off debt
  • people owned money get less
  • saved money is worth less
28
Q

What is the effect of inflation on firms

A
  • harder to export
  • people want to save their money
  • difficult to predict
  • have to calculate new prices
29
Q

What is the effect of inflation on government

A
  • need to change taxes in line with the inflation
30
Q

What is the effect of inflation on workers

A
  • if their pay doesn’t increase they are worse off
  • deflation could cause some staff to lose their jobs
31
Q

What is the claimant count

A

the number of people receiving benefits for being unemployed

32
Q

What is the LFS

A

a sample of people living in households that are employed, unemployed or inactive

33
Q

Who are the hidden unemployed

A
  • part time wishing to be full time
  • people of government training schemes
  • sick or disabled
  • those not actively seeking a job but would take one if given
34
Q

Who are the economically active

A

the employed and unemployed

35
Q

Who are the workless

A

the unemployed and inactive

36
Q

What is under-employment

A

those who are in part time or zero hour jobs but would prefer to be full time or those who’s skills are not being put to work

37
Q

What are the 4 types of unemployment

A

frictional, structural, seasonal, cyclical

38
Q

What is frictional unemployment

A

unemployment due to people moving between jobs

39
Q

What is structural unemployment

A

a long term decline in demand in an industry leading to reduction in employment. it is also geographical and occupational mobility

40
Q

What are the 3 types of structural unemployment

A

regional unemployment - certain areas suffer from low employment levels
sectoral unemployment - one sector falls in employment
technological unemployment - jobs replaced by tech

41
Q

What is seasonal unemployment

A

jobs that are only in demand for certain period of time

42
Q

What is cyclical unemployment

A

a general lack of demand of goods and services within the country

43
Q

What is real wage inflexibility

A

Unemployment considered to be the result of real wages being above their market clearing level

44
Q

What does migration do to the economy

A

increased jobs but decreased wages. They can however fill more skilled jobs that can’t be filled

45
Q

What is the impacts of unemployment on workers

A
  • loss of income
  • stigma of being unemployed
  • find it harder to find jobs
  • lower job security fear unemployment
46
Q

What is the impact of unemployment on firms

A
  • decreased demand for goods
  • loss of skills and reduced employability of workers
  • can offer lower wages
47
Q

What are the impacts of unemployment on consumers

A
  • less choice
  • less available to spend
48
Q

What are the impacts of unemployment on goverment

A
  • reduced income results in a fall in tax revenues
  • increase budget deficit
49
Q

What are the effects of unemployment on society as a whole

A
  • social deprivation
  • loss of potential national ouput
50
Q

What is the balance of payments

A

A record of all financial dealings over a period of time between economic agents of one country and all other countries

51
Q

What is in the components of the balance of payments

A

Current account and capital and financial account

52
Q

What is the current account

A

Record of payments of goods and services. Four parts are:
- Trade in goods
- Trade in services
- Income and current transfers
- Current transfers of government

53
Q

What is the current account balance equation

A

Balance of trade + balance of invisibles + net income and current trasfers

54
Q

What are governments four main objectives

A
  • low unemployment
  • low and stable inflation
  • economic growth at a similar rate to other economies
  • a blance of payment equilibrium
55
Q

What four key ways have led to globalisation

A
  • The proportion of output of an individual economy which is growing
  • people own assets in other countries
  • increased migration
  • more technology

Economics (8 decks)

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