Macro 1 - economic indicators and gov objectives

Question 1

What does TIGERS stand for?

Answer 1

Trade
Inflation
Growth
Employment
Redistribution 
Stability

Question 2

What are the government aims for the indicators?

Answer 2

Trade - balanced between exports and imports
Inflation - 2%
Growth - economic growth as high as possible
Employment - as high as possible
Redistribution
Stability

Question 3

Equation to work out Index Numbers

Answer 3

Value for current period/Value for base period x 100

Question 4

What is GDP?

Answer 4

GDP is a measure of economic growth

Question 5

What is economic growth?

Answer 5

Economic growth is the change in national output over a period of time.

Question 6

What is national output measured by?

Answer 6

National output is usually measured the value (GDP) of goods and services in a year. It can also be measured by quantity.

Question 7

What is the difference between real and nominal GDP?

Answer 7

Real GDP does not include inflation whereas nominal does

Question 8

What is GDP per capita?

Answer 8

GDP per capita is the GDP per person which can theoretically tell us the living standards in a country.

Question 9

How is GDP per capita calculated?

Answer 9

total GDP/population = GDP per Capita

Question 10

How is economic growth calculated?

Answer 10

Change in GDP/orignal GDP x 100 = percentage change

Question 11

What is the definition(s) of inflation?

Answer 11

• sustained change in the average price of goods and services over a period of time
• Fall in purchasing value of money

Question 12

How is inflation measured?

Answer 12

Through the RPI and the CPI

Question 13

What are the definition(s) of unemployment?

Answer 13

• The level of unemployment is the number of people who are looking for jobs but can’t find one
• The rate of unemployment is the number of people out of work as a percentage of the labour force

Question 14

What are the ways of measuring unemployment?

Answer 14

The claimant count and the labour force survey

Question 15

What is the difference between the RPI and the CPI?

Answer 15

CPI is lower than RPI because it doesn’t use some items such as mortgage interest repayments and council tax. It also uses a different formula, as a result it uses a larger sample of the population

Question 15

What is the claimant count?

Answer 15

The claimant count is the number of people who are claiming unemployment benefits from the government such as job seekers allowance (JSA). This means it excludes people who are looking for work but don’t claim any benefits

Question 15

What is the labour force survey?

Answer 15

The labour force survey uses a sample of the population and asks unemployed people if they are actively seeking work. It is higher than the claimant count as they can still be claiming benefits while looking for a job which means certain groups of people are not excluded.

Question 16

What are the four main types of unemployment and what do they mean?

Answer 16

Structural - jobs aren’t needed in their profession
Cyclic - recession across the planet
Frictional - have a job but waiting for it to start
Seasonal - job only happens during a certain season

Question 17

How is labour productivity measured?

Answer 17

Output/unit of labour = labour

Question 18

What is labour productivity? What happens if it is high?

Answer 18

The amount of output each employee puts out. If productivity is higher, more products can be made for less cost.