MACRO 1 Flashcards
Macroeconomic Indicators and Government Objectives
What are the macroeconomic indicators?
Trade Income Growth Employment Redistribution of income Stability (TIGERS)
What is productivity?
Output per worker per hour
What is GDP?
The value of newly produced final goods and services produced in an economy within a time period.
What is GNP?
Gross National Product - GDP + Value of sales in other countries.
What is real GDP?
GDP but counts in inflation, allowing you to see changes over time.
What are the 3 types of inflation?
Cost-push inflation - firms raise prices to cover costs.
Demand inflation - firms raise prices in times of high demand
Printing money - amount of money in circulation increases, raising prices.
What is the optimal inflation rate?
2%
What is CPI?
Consumer Price Index - A measures that examines the weighted average of prices of a basket of consumer goods and services. Used to see how these prices change over time (inflation).
What is the working force?
Anyone not in the military, over 16, not in jail and seeking work.
What is unemployment?
Not working but seeking work
What is the participation rate?
The percentage of the population that’s in the working force.
What are the types of unemployment?
Frictional - Awaiting a job with your skills.
Structural - Being unemployed after your skills aren’t required any more.
Seasonal - When your job only requires you working in a part of the year.
Cyclical - When unemployment rises due to the economy falling.
What is full employment?
When the unemployment rate is equal to the natural unemployment rate (unemployment caused by frictional and structural)
What are the two ways of calculating unemployment?
Claimant count (Hard to compare internationally due to different criteria to claim) Labour force survey (less reliable to better to compare)
How can you improve productivity?
Increase quantity of workers
Increase quality of workers
