2.1 Measures of Economic Performance Flashcards
Difference between real and nominal GDP
Real GDP is adjusted to inflation whereas nominal has no adjustments
Inflation definition and UK target
general rise in prices of g/s in an economy
2%
Limits of using GDP for comparisons 3
no info on inequality
no info on quality of g/s
no info on environmental factors
Deflation definition
Fall in the price levels
Disinflation
Inflation at a slower rate
What is CPI
Consumer price index -a basket of g/s from the average household
2 causes of inflation
Demand pull inflation
Cost push inflation
What causes demand pull inflation
excess demand in the economy
What causes cost push inflation
Increasing cost of production
Fall in productivity
2 main measures of unemployment
Labour force survey (ILO) and the Claimant count
What is the Claimant Count
Amount of people claiming unemployment related benefits eg JSA
What is the ILO
survey sent to 60k people who determine their employment status
Underemployed meaning
Overqualified in their job or wanting to work more hours
4 main causes of unemployment
Structural
Cyclical
Seasonal
Frictional
Structural unemployment definition
When there is no longer a need for a specific job in the economy
Cyclical unemployment definition
fall in demand in an economy
as output falls , firms will lay off workers
Seasonal unemployment definition
When a job is not required during a certain season eg. ice cream men, fruit pickers
Frictional unemployment definition
time taken to move between jobs
short term
balance of payments and its sections
All financial transactions between a country and the rest of the world
Current Account
transactions of g/s
Financial/capital account
all transactions related to saving/investment and currency
How to fix a current account deficit
Raise tariffs->less imports-> higher AD
- firms who rely on imported raw materials will have higher cost of production-> higher prices for consumers
