LS2 - Measures Of Economic Performance

Question 1

Index number

Answer 1

Raw number in period/raw number in base period x 100

Question 2

Real vs nominal

Answer 2

Nominal - measurements made using prices current at time transaction takes place
Real - quantities produced after having removed effects of price changes

Question 3

Converting nominal to real

Answer 3

100 x nominal gdp/real gdp = price index

Question 4

GDP

Answer 4

Total output of an economy during a period of time

Question 5

GNI

Answer 5

Takes into account income flows between countries, standard measure used by world bank to compare average incomes across countries
GDP plus net income abroad

Question 6

Purchasing power parity

Answer 6

Measurement used to compare spending power between two or more nations

Question 7

Inflation

Answer 7

Increase in overall price levels in an economy

Question 8

Deflation

Answer 8

Negative inflatioj

Question 9

Disinflation

Answer 9

When inflation falls relative to previous period

Question 10

Unemployment and economically inactive

Answer 10

U - State of being out of work while willing and able to work
EA - those who are of working age but are neither in work nor actively seeking work

Question 11

Measures of unemployment

Answer 11

Claimant count - Number of people registered as unemployed and claiming unemployment benefits (JSA)
ILO unemployment rate - measure based on labour force survey and identifies number of people available for work, seeking work but without a job. Starts at 16-17

Question 12

Problems of unemployment measurement

Answer 12

Doesn’t include some workers (immigrants and homeless)
Not everyone unemployed will claim benefits due to the stigma of relying on it - so it underestimated unemployment
ILO asks 80000 households whether anyone has been out of work for 4 weeks or start in next 2. But there are 27m households so not an accurate estimate of unemployment

Question 13

Underemployment

Answer 13

People who are unable to work as many hours as they want or are overqualified for their job

Question 14

Balance of payments

Answer 14

Record of all financial dealing over a period of time between economic agents of one country and all other countries

Question 15

Measuring inflation

Answer 15

ONS living costs and goods survey - average basket of 700 goods and services to track prices - record prices of goods at different markerts

Question 16

CPI

Answer 16

Measures overall change in consumer prices based on their basket of goods and services

Question 17

Current account

Answer 17

Where payments for purchase and sale of goods and services are recorded

Question 18

Capital and financial accounts

Answer 18

Flows of money associated with saving, investment, speculation and currency stabilisation are recorded

Question 19

Current account made up of what

Answer 19

Trade in goods - visibles so exports and imports of goods
Trade in services - invisibles so imports and exports of services
Primary income - Money flowing in and out of country resulting from employment or earlier investment
Secondary income - transfer of money between countries not paying for goods or services like transferring money between family members

Question 20

Current account deficit

Answer 20

Imports > exports
More money going out than it

Question 21

Current account surplus

Answer 21

Exports > imports
More money coming in than out