6.2 macroeconomic indicators Flashcards
How is Economic growth measured?
Measured by Gross Domestic Product (GDP) or GDP per capita
What 4 variables are used to measure economic performance?
Economic growth
Unemployment
Inflation
Balance of payments
How is unemployment measured?
Usually measured as ‘level’ or ‘rate’
How is inflation measured?
Measured by the Consumer Price Index (CPI) and the Retail Price Index (RPI) (Used in index form)
How is balance of payments measured?
Typically measured in terms of the value of the net exports
On the economic cycle, what is the trend rate of growth?
It is the rate of growth that can be sustained without generating any inflationary pressure
It is determined by the rate of growth of productive potential
On the economic cycle what is the positive output gap?
When the economy temporarily grows faster than the trend rate operating in the short run beyond its full capacity
On the economic cycle, what is the negative output gap?
When aggregate demand is growing at a slower rate, or falling in relation to its productive potential
This was most recently observed in the UK during the recession of 2008-2012
What is the basket of goods and services?
The ‘shopping basket’ of items used in compiling the various measures of consumer price inflation are reviewed each year
Some items are taken out of the basket and some are brought in to make sure the measures are up to date and representative of consumer spending patterns
What’s the definition of unemployment?
“The number of people looking for work but who cannot find a job at a point in time.”
Members of the labour force who want to work, are able to work, but are unable to find a job.
Why is the labour force survey usually higher than the claimant count survey?
it includes all those receiving benefits as well as those who do not qualify for (or do not wish to claim) benefits
What are the types of unemployment?
Cyclical, Structural, Frictional, Seasonal, Technological, Regional
What are the causes of unemployment? (3)
Lack of aggregate demand, labour immobility, unemployment trap where welfare benefits make it unviable to go to work
What is cyclical unemployment?
usually occurs during a recessionary period in an economy
The demand for labour is derived, so a lack of demand for goods and services leads to a lack of demand for labour to produce those goods and services
What is structural unemployment?
Occurs when there is a difference between the characteristics workers have e.g. skills and geographical mobility, and the characteristics required by employers
What is frictional enemployment?
The period of time when a worker is moving between jobs
It is usually considered to be short term in nature
What is seasonal unemployment?
Unemployment that occurs through seasonal fluctuations in demand throughout the year
Unemployment figures are usually adjusted to take account of this
What is technological unemployment?
Created through the increasing degree of automation in the production process
What is Regional unemployment?
Typically linked to structural unemployment, a situation where a town or region experiences a downturn; for example through the declining importance of an industry which is heavily favoured in that area
What is labour productivity?
the output per worker:
Total output/no. of workers
What is capital productivity?
The output per unit of capital e.g. machine
What is the factor productivity?
the average output of all factors of production
