Macro 1 - economic indicators and gov objectives Flashcards
What does TIGERS stand for?
Trade Inflation Growth Employment Redistribution Stability
What are the government aims for the indicators?
Trade - balanced between exports and imports
Inflation - 2%
Growth - economic growth as high as possible
Employment - as high as possible
Redistribution
Stability
Equation to work out Index Numbers
Value for current period/Value for base period x 100
What is GDP?
GDP is a measure of economic growth
What is economic growth?
Economic growth is the change in national output over a period of time.
What is national output measured by?
National output is usually measured the value (GDP) of goods and services in a year. It can also be measured by quantity.
What is the difference between real and nominal GDP?
Real GDP does not include inflation whereas nominal does
What is GDP per capita?
GDP per capita is the GDP per person which can theoretically tell us the living standards in a country.
How is GDP per capita calculated?
total GDP/population = GDP per Capita
How is economic growth calculated?
Change in GDP/orignal GDP x 100 = percentage change
What is the definition(s) of inflation?
- sustained change in the average price of goods and services over a period of time
- Fall in purchasing value of money
How is inflation measured?
Through the RPI and the CPI
What are the definition(s) of unemployment?
- 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
What are the ways of measuring unemployment?
The claimant count and the labour force survey
What is the difference between the RPI and the CPI?
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
What is the claimant count?
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
What is the labour force survey?
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.
What are the four main types of unemployment and what do they mean?
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
How is labour productivity measured?
Output/unit of labour = labour
What is labour productivity? What happens if it is high?
The amount of output each employee puts out. If productivity is higher, more products can be made for less cost.
