Government Objectives and Measures of Growth

Question 1

Name Four main Economic Objectives

Answer 1

Low and stable inflationReal Economic GrowthLow UnemploymentBalance of payments

Question 2

Name three secondary objectives

Answer 2

Income distribution (equality)Environmental externalitiesBalancing budget

Question 3

Measures for Unemployment (2)

Answer 3

Claimant CountLabour Force Survey

Question 4

Why is the LFS usually higher than the Claimant Count?

Answer 4

Not all members of a household will claim benefits, while some will still unemployed - People may be unemployed but not eligible for benefits

Question 5

What are the criteria for the LFS?

Answer 5

Monthly survey60,000 householdsUses International Labour Organisation definition of u/e - looked for work past 4 weeks, ready to start in 2 weeks

Question 6

What is GVA

Answer 6

Gross value added (value of resources used to produce goods and services)

Question 7

How is GDP calculated

Answer 7

GVA + taxes - subsidies

Question 8

How do you calculate Real values with indices

Answer 8

NAME?

Question 9

National Output is theoretically the same as…

Answer 9

National income and national expenditure

Question 10

What is capital depreciation

Answer 10

loss in value of capital due to capital consumption and depreciation

Question 11

GDP + NPIA = ?

Answer 11

GNI

Question 12

What is NPIA

Answer 12

Net property income from abroad (international earnings)

Question 13

Why is GNP a better measure than GDP?

Answer 13

It includes overseas and domestic earnings

Question 14

NNI =

Answer 14

GNI - depreciation

Question 15

What is the best estimate for a country’s national income

Answer 15

Net National Income (NNI) = GVA + taxes - subsidies + NPIA - capital depreciation

Question 16

What type is excluded from National Income calculations?

Answer 16

Transfer payments as they have no corresponding outputs

Question 17

Name a transfer payment

Answer 17

2nd hand tradeGovernment benefitsPocket Money

Question 18

What is the most common value used for comparing country’s national income?

Answer 18

GDP pc - accounts for population size and is readily available data

Question 19

Name 5 weaknesses with GDP pc when comparing countries

Answer 19

Purchasing powerQuality of G+S may differIncome distribution is ignoredExternalities ignoredUnrecorded Economy may differ in size

Question 20

What is GNP

Answer 20

Value of G+S produced domestically and internationally by residents