Index Numbers

Question 1

What is an economic aggregate?

Answer 1

Looking at the entirety rather than a single part. If this were employment, it would be the employment of workers throughout the UK rather than in one firm

Question 2

What are the focuses of which the economy is monitored?

Answer 2

Inflation rate, unemployment, economic growth, international trade

Question 3

What does it mean if a country is open?

Answer 3

A country that actively engages in international trade

Question 4

Why is inflation rate a measure of the economy?

Answer 4

It has been argued that maintaining a steady rate of inflation is needed for a stable economic environment which is crucial to enabling markets to operate effectively

Question 5

Why is unemployment a measure of the economy?

Answer 5

Unemployment is seen as an indicator of whether the economy is using its resources to the full; whether the factors of production are not being fully utilised

Question 6

Why is economic growth a measure of the economy?

Answer 6

If the economy is expanding its potential capacity as times go by it makes more resources available for its members of society. This makes it a better economy

Question 7

Why is international trade a measure of the economy?

Answer 7

International trade are the concerns of a nations engagement in global relations which impacts the current account

Question 8

How do we observe the economy’s function?

Answer 8

Using data is our way to observe the economy and make a judgement on its performance

Question 9

What is the purpose of an index number?

Answer 9

An index number helps to solve problems by making incomparable data easy to comprehend

Question 10

How to calculate the index number?

Answer 10

The first step is to select a base period which is the beginning of a time series

Index number = Raw number in Period /// Raw Number in Base Period *** 100