lesson 2

Question 1

define economic growth

Answer 1

an increase in real national output

Question 2

what is an economic cycle?

Answer 2

When actual growth varies/changes/fluctuates around the trend

Question 3

when do we have an output gap?

Answer 3

if the actual is above or below the trend

Question 4

what are the four main government objectives?

Answer 4

high economic growth
low unemployment
low inflation
reasonable balance of payments

Question 5

what is Yfe?

Answer 5

number of vacancies matches the number of job seekers

Question 6

what indicators in macro economic show how a country is functioning?

Answer 6

BOP
GDP
CPI and RPI
unemployment

Question 7

indicators such as growth, unemployment and inflation are known as what type of indictors?

Answer 7

lag indicators. as they tell us what has happened

Question 8

what do lag indicators tell us about the four main macro indicators?

Answer 8

they tell us what has happened

Question 8

what do lead indicators tell us about the four main macro indicators?

Answer 8

they tell us information on what might happen next

Question 9

what is GDP used to measure?

Answer 9

the value of all the goods and services produced in the economy

Question 10

what are the three main sectors of GDP?

Answer 10

manufacturing, agriculture and the services industries

Question 11

how do you figure out the REAL GDP?

Answer 11

the nominal rise value - the rate inflation is running at

Question 12

what is the GNI?

Answer 12

our own income and the income from abroad

this is important because many developing counties depend on remittance money

Question 13

what is the RPI?

Answer 13

headline rate of inflation.
weighted index of inflation.
a rate of inflation that is based on the percentage change in costs for goods and services

Question 14

what is the CPI?

Answer 14

it is used when calculating increases/ changes to benefits and pensions.
a weighted index of inflation.
it measures the average changes in prices paid by consumers for goods and services over time

Question 15

what does the RPI include?

Answer 15

mortgages rates which includes interest rates which are the main costs of houses

Question 16

what is the RPI effected by?

Answer 16

changes in interest rates because it includes them and they are the main costs of a house

Question 17

what is the CPI and RPI known as in terms of a rate of inflation?

Answer 17

a weighted price index

Question 18

what do we mean when we refer to the RPI and CPI as weighted price indexes?

Answer 18

we want the index to reflect what we actually spend our money on

Question 19

what is the claimant count?

Answer 19

the number of people out of work and claiming benefits

Question 20

what is the ILO survey?

Answer 20

a quarterly sample survey of households which asks questions about their labour market status (unemployment) it measures the amount of people who have been unemployed for a minimum of four weeks and are ready to start working in the next two weeks

Question 21

why is the claimant count not good for international comparison?

Answer 21

each country does it differently so we cant compare them

Question 22

why is the ILO survey better than the claimant count?

Answer 22

because it is done the same internationally so we can use it to compare data

Question 23

why is the claimant count better than the ILO survey?

Answer 23

because its easier to do than the ILO one.
find out the data faster.
good way to see how your own country is functioning with unemployment rates

Question 24

what is a flexible labour market?

Answer 24

when its easy to hire and fire people

Question 25

what is a trade deficit?

Answer 25

when we import more than we export

Question 26

what does BOP tell us about a country on a world stage?

Answer 26

how competitive a country is on the world stage through the amount we are importing and exporting