Lesson 1 - Measuring Macroeconomic Performance

Question 1

Define economic growth

Answer 1

The rate of change of output

Question 2

What is economic growth measured with?

Answer 2

Real GDP

Question 3

What is actual growth?

Answer 3

Growth that is currently happening (short run), demand side

Question 4

What is trend growth?

Answer 4

The average over time (long run)

Question 5

What is unemployment?

Answer 5

Those who are willing and able to work, but cannot get a job

Question 6

What is the problem with unemployment and why is this an issue?

Answer 6

Carries an opportunity cost because the resources used on providing benefits on the unemployed could be used elsewhere (e.g education)

Question 7

What is infilation?

Answer 7

• a fall in the value of money
• a rise in the general price level

Question 8

What can inflation lead to?

Answer 8

• The wage squeeze
• The wage-price spiral
• Inflationary noise

Question 9

What is the balance of payments?

Answer 9

The balance between imports and exports in an economy

Question 10

Why is a balance of payments important?

Answer 10

Shows competitiveness

Question 11

What is the UK’s balance of payments deficit like?

Answer 11

• large BoP deficit
• the UK is a net importer

Question 12

Define GDP

Answer 12

The value of everything produced in an economy in a period of time, at a given price level