KEI Flashcards
CPI
The Consumer Price Index (CPI) measures the price of a fixed basket of good and services commonly purchase by a typical household
Purchasing Power Parity (PPP)
PPP is a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries
GDP
Gross Domestic Product (GDP) is the value of all final goods and services produced within the geographical boundary of a country during a given period of time
GNI
Gross National Income (GNI) measures the value of all final output of goods and services produced by nationally owners factors of production during a given period of time, using the income approach
Opportunity Cost
Opportunity cost is the value of the next best alternative forgone
Inflation rate
The inflation rate measures the change in price level from year to year, and is measured in percentages (%).
Inflation rate (current year) = (CPI current year - CPI previous year) / ( CPI previous year) * 100%
Unemployment
Unemployment of labour refers to the situation where people are willing and able to work and are actively seeking work but are unable to find jobs
Material standard of living
For material standard of living (SOL), it is measured by the amount of goods and services that is available for consumption by the average person in a given country in a given time. It is a measure of the purchasing power of an average individual. The indicator used to measure material SOL is real GDP per capita.
Non-material standard of living
For non-material SOL, it is a measure of the quality of life. Such qualitative indicators include, for example, political, social, presence and degree of negative externalities, leisure hours one enjoys, crime rates, literary rates, life expectancies etc.
Balance of Payments (BOP)
The BOP is a record of a country’s international transactions that involve the flow of money between a country and the rest of the world
Composite indicator- Human Development Index
The Human Development Index (HDI) is the most widely used indicator and it measures the average attainment of a long and healthy life, knowledge and a decent material standard of living. It includes measurements of life expectancy at birth, mean number of years of schooling for adults and expected years of schooling for students, and also PPP-adjusted real GNI per capita.
Composite indicator- Measure of Economic Welfare
Measure of Economic Welfare (MEW) adjusts measures. of total national output such as GDP or GNI by adding the value of leisure and of transactions in the underground economy. It also deducts the cost of environmental damage. It involves the difficult task of assigning monetary value to non-marketed goods.
