2.1 Measures of economic performance Flashcards
What are 2 measures of unemployment? (2)
The claimant count
The ILO Labour force survey
If someone is unemployed what are they?
Willing and able to work but not employed
If someone is underemployed what are they? (2)
Someone with a job but their labour is not being used to its fullest potential
People working part-time looking for a full time job
If someone is inactive what are they? (2)
Someone not actively looking for a job
Some who is not economically active
What is an example of someone who is not economically active? (3)
Children
The disabled
Pensioners
What are the 5 causes of unemployment? (5)
Structural
Cyclical
Frictional
Seasonal
Real wage inflexibility
What is structural unemployment? (2)
Skills becoming obsolete
Industries in decline of workers
What is cyclical unemployment?
Due to a lack of spending in the economy workers are made redundant
What is frictional unemployment?
When workers are between jobs
What is Seasonal unemployment?
When workers are out of work for periods in the year
What is real wage unemployment?
When there are issues with the supply side of labour
What is real world example of structural unemployment?
People operating horse drawn carriages
What is an example of cyclical unemployment?
People loosing their jobs in a recession?
What is an example of an occupation which would see seasonal unemployment?
Ski instructors, Ice cream man…..
What is reason that real wage unemployment might occur?
Because the minimum wage is too high
What happens to the supply of labour when migrants enter the economy?
the supply of labour increases
What is hysteresis? (2)
When workers are unemployed for a long time are likely to loose their skills
Workers are less motivated to work
What is inflation?
An increase of the general price of goods overtime
What is deflation?
A decrease in the general price of goods overtime
What happens to the cost of living when inflation occurs?
The cost of living rises
What happens to the purchasing power of money when inflation occurs?
The purchasing power of money decreases
What is disinflation?
A falling rate of inflation
Are prices still rising when disinflation is occurring?
Prices are still rising but just slower
What is happening to the purchasing power of money when disinflation is occurring?
The purchasing power of money is increasing
What are two methods of calculating inflation? (2)
The Consumer price index (CPI) and the Retail price index (RPI)
What does CPI measure?
Household purchasing power
How is the data used to calculate CPI collected?
A survey (the family expenditure survey)
The family expenditure survey finds out what ….. spend their …… on, to create the ….. of …..
The family expenditure survey finds out what consumers spend their income on, to create the basket of goods
Goods in the basket of goods are ….. based on how much …… is spent on the good
Goods in the basket of goods are weighted based on how much income is spent on the good
What is an example of a good which has a higher weighting in the basket of goods?
Petrol, energy
The basket of goods only represents the goods for …..
the average household
Different demographics have different ……
Spending patterns
CPI responds to new goods and services …… , even when …….
Slowly , updated regularly
Its difficult to compare historical CPI data due to …….
Changes in technology
How is the Retail price index, RPI, different to the CPI? (2)
It includes housing costs and payments on mortgage interest
RPI usually has higher values than …..
CPI
Who does RPI exclude? (2)
The top 4% of earners
Low income pensioners
When prices rise what does CPI do that RPI doesn’t?
It considers that consumers switch to cheaper goods
What are three types of inflation? (3)
Demand pull
Cost push
Growth in the money supply
What does demand pull inflation mean?
Inflation occurs due to an increase in AD
What does cost push inflation mean?
Inflation occurs due to firms facing rising costs
What is GDP?
The total value of goods and services produced in a country overtime
What can GDP be used as an indicator for?
The standard of living in a country
What does total GDP represent?
The GDP for the whole country
What is GDP per capita?
Total GDP divided by the number of people in the country
What is real GDP?
Is GDP but inflation is taken into account (taken out)
What is nominal GDP?
GDP but inflation is left in
What can real values be described as?
The volume of national income
What can nominal values be described as?
The value of national income
What is economic growth?
The rate of change of output
What is GNI?
The value of goods and services produced by a country overtime
