Key Economic Indicators

Question 1

Measure of Inflation x3

Answer 1

Retail Price Index (RPI)

RPIX

Consumer Price Index

Question 2

Retail Price Index

Answer 2

Measure of Inflation

Average price standard basket of goods

Used for Index Linked Gilts

Question 3

RPIX

Answer 3

Measure of Inflation

Same as RPI apart

excludes Mortgage Interest Payments

Question 4

Consumer Price Index

Answer 4

Measure of Inflation

Internationally comparable measure within EU

Used by BOE (MPC)

Question 5

Gross Domestic Product (GDP)

Answer 5

Measures productivity of a country

Market Value of goods and services within a country

Includes - Foreign - owned factors producing in UK
E.G. Japanese owned factory in UK

Excludes - UK owned factors production aboard
e.g. UK owned factory based in Japan

Question 6

Level of Unemployment

Answer 6

Indication of health of economy

High indicates fall in
Production
Tax receipts

Low leads to
Increased wages
Inflation

Question 7

Gross National Product (GNP)

Answer 7

Measures wealth of country

Opposite of example about GDP

Question 8

UK Balance of Payments

Answer 8

Balance of Trade

1) Current Account
2) Capital and Financial Account

Question 9

Current Account

Answer 9

X - M ( Exports - Imports)

Visibles
Primary + Secondary

Invisibles
Tertiary

Question 10

Capital and Financial Account

Answer 10

Includes UK investment abroad and foreign investment in UK

Question 11

Budget Deficit

Answer 11

Public Sector Net Cash Requirement (PSNCR)

Diff govt receives and spends in a given year

Govt deficit = earn less then what they spend

Increase in PSNCR = Inflation

Question 12

Government Debt

Answer 12

Total of all accumulated national debt

Overall amount

Question 13

GOVT reduce PSNCR

Answer 13

Reduce spending

Increase tax