LS2 - Measures Of Economic Performance Flashcards
Measures Of Economic Performance
Rate Of Unemployment Rate Of Inflation/Econ G Balance Of Payments Government Budget Inequality Quality Of Environment
Index Number Equation
Raw Number In Period/Raw Number In Base Period x 100
Nominal GDP
The value of output in an economy (without considering inflation).
Real GDP
Takes inflation into account using the GDP deflator.
GDP Deflator Equation
Is the price index.
Nominal GDP/Real GDP x 100.
Long Run Economic Growth
Expansion of the economy’s capacity to produce goods and services.
Short Run Economic Growth
Increase in real GDP over a given time period
GDP Per Capita Equation
GDP In A Period/Number Of People In The Country
Why Do We Measure GDP
Indicates Standard Of Living
Helps Make And Evaluate Decisions
Determines The Government’s Ability To Afford Debt
GDP Growth Equation
(Current GDP - Original GDP)/Original GDP x 100
Inflation
A sustained increase in the general price level of goods and services within a given time period.
Inflation Problem?
How to track the prices of goods and services for the purpose of measuring inflation e.g. other factors might come into play.
Disinflation
A reduction in the rate of inflation.
Unemployed
Being out of work while willing and able to work.
Economically Inactive
Those who can work but aren’t working or seeking work.
Underemployment
Lawyer in MCDs
Measures Of Unemployment
The Claimant Count
The ILO Unemployment Rate
Claimant Count
Those claiming unemployment benefits
The ILO Unemployment Rate
Generated from a quarterly survey of approximately 60,000 households.
Unemployment Rate
Number Of People Unemployed/Labour Force x 100
Claimant Count Disadvantages
Excludes people who are over pension age, under 18 and those only looking for part-time work.
ILO Disadvantages
Can’t accurately decide whether someone’s ill or actively seeking work.
Balance Of Payments
Records all financial transactions between residents of a country and the rest of the world.
Primary Income
Income from investments.
Secondary Income
Money that doesn’t results from earnings e.g.. govt aid and remittance payments.
