2.9 Measures of economic performance: economic growth Flashcards
What is macroeconomics?
the study of the interrelationships between economic variables at an aggregate (macroeconomic) level.
what is “nominal value”?
the value of an economic variable based on current prices, taking into account of changing prices through time.
what is “real value”?
the value of an economic variable, taking account of changing prices through time.
what is index number?
a device for comparing the value of a variable in one period or location with a base observation (e.g. the consumer price index).
what is potential economic growth?
an expansion in the productive capacity of the economy.
what is gross domestic product, (GDP)?
a measure of the economic activity carried out in the domestic economy over a period.
what is gross national income, (GNI)?
GDP plus net income from aboard.
what is actual economic growth?
the rate of growth of GDP in a period.
what is the business cycle?
a phenomenon whereby GDP fluctuates around its underlying trend, following a regular pattern.
what is GNI per capita?
the average level of GNI per head of population.
what is inflation?
the rate of increase in the average price level in an economy
What is consumer price index, (CPI)?
a measure of the general level of prices in the UK, the rate of change of which has been used as the government’s inflation target sine January 2004.
What is retail price index, (RPI)?
A measure of the average level of prices in the UK
What is deflation?
A fall in the average leek of prices (negative inflation).
What is disinflation?
A fall in the rate of inflation
What does “in employment” mean?
People who are either working for firms of other organisations, or self-employed.
What does economically inactive mean?
Those people of working age who are not looking for work, for a variety of reasons.
What does discouraged workers mean?
People who have been unable to find employment and who are no longer looking for work.
What does workforce mean?
People who are economically active - either unemployment or employment.
What does unemployment mean
People who are economically active but not in employment.
What does full employment mean?
A situation where people who are economically active in the workforce and are willing and about to work (at going wage rates) are able to fine employment
What does claimant count of unemployment mean
The number of people claiming the Jobseeker’s Allowance each month
What is ILO unemployment rate?
A measure of the percentage of the workforce who are without jobs, but are available for work, willing to work and looking for work.
What does underemployment mean
Where an individual is employed in a second - choice occupation or is only able to work part-time but would like to work full-time
What is frictional unemployment
Unemployment associated with job search (I.e. People are between jobs).
What is structural unemployment,
Unemployment arising because of changes in the pattern of economic activity within an economy.
What is cyclical unemployment
Unemployment that arises during the downturn of the economic cycle, such as a recession
What is demand-deficient unemployment
Unemployment that arises because of a deficiency of aggregate demand in the economy, so that the equilibrium level of output is below full employment
What is seasonal unemployment
Unemployment that arises in seasons of the year when demand is relatively low
What is voluntary unemployment
Situation arising when an individual chooses not to accept a job at the going wage rate
What is involuntary unemployment
Situation arising when an individual who would like to accept a job at the going wage rate is able to fine employment
What is balance of payments
A set of accounts showing the transactions conducted between residents of a country and the rest of the world
What is exchange rate
The price of one currency in terms of another
What is aggregate demand
The to take amount of spending on goods and services produced in an economy during a period of time
What is consumption (part of aggregate demand)
Total planned household spending
What is disposable income?
The income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments
What is a eager propensity to consume?
The proportion of income that households devote to consumption
What is marginal propensity to consume, (MPC)?
The proportion of additional income devoted to consumption
What is marginal propensity to save (MPS)
The proportion of an increase in disposable income that households would devote to saving
What is consumption function
The relationship between consumption and disposable income; its position depends on the other factors that affect how much households spend on consumption
