Macro 1: Macroeconomic indicators and government Objectives Flashcards
What is macro economics
macroeconomics is interested in many industries operating within or between national economies
What are the key microeconomic indicators
Trade (balance)
Inflation
Growth
Employment
Redistribution
Stability
Sustainability
Balance Budget
What are the the main government objectives for the macro economy
Achieve economic growth, Maintain low unemployment, Achieve price stability, and Maintain a balanced balance of payments
What is meant by economic growth
Economic growth is the increase in a country’s ability to produce goods and services over a period of time. It is often measured in GDP (Gross Domestic Product).
What is meant by price stability and inflation
Inflation is the sustained increase in the general price level of goods and services in an economy over a period of time, It reduces the purchasing power of money
What is meant by unemployment rate
The percentage of people in the labour force who are actively looking for work, measure by the labour force survey
What is meant by unemployment level
The percentage of the labour force that is unemployed, or without a job but actively looking for work:
What is meant by balance of payments on the current account
It is a statistical statement that measures all cross-border transactions between a country and the rest of the world over a period of time.
How is inflation measured
In the UK, we measure inflation with the CPI (Consumer Prices Index).
CPI formula - divide the current product price total by the past price total then times by 100.
How is unemployment rate measured
The labour force survey
How is balance of payments measure
current account + capital account + financial account + balancing item
What is the difference between real GDP and nominal GDP
The difference is that real GDP is adjusted for inflation and nominal isn’t
What is CPI
CPI is a price index that measures the price changes in a basket of goods that a consumer faces.
What is RPI
RPI is a price index that uses the same principles as CPI but uses a different basket of goods/services to measure like housing and retail
How is CPI used to measure price levels
You can compare the value of the CPI to the year before and see how much it has changed which the inflation level
