9 The measurements of macroeconomic performance

Question 1

Objectives of government

Answer 1

• economic growth
• price stability
• minimise unemployment
• stable balance of payments on current account
• balancing budget
• achieving an equitable distribution of income

Question 2

Policy conflict

Answer 2

attempts to achieve one economic objective move us away from another economic objective

Question 3

Two ways of measuring unemployment

Answer 3

• Labour force survey
• Claimant count

Question 4

Economically inactive

Answer 4

those of working age who are not in work and not seeking one

Question 5

Productivity

Answer 5

a measure of efficiency comparing the level of output with level of inputs

Question 6

Current account

Answer 6

part of balance of payments that looks at net income flows earned through either trade in goods and services or the reward from investments located overseas

Question 7

Sections of balance of payments

Answer 7

• current account
• financial account

Question 8

Price index

Answer 8

an average level of prices based on a selection of products bought by the typical household

Question 9

Limitations of national income

Answer 9

• distribution of income
• composition of GDP
• shadow economy
• non-marketed output
• negative externalities
• non-financial factors

Question 10

Purchasing power parity (PPP)

Answer 10

the exchange rate that would equalise the price of goods and services in different countries once concverted into the same currency