Macro 1 - Macroeconomics Indicators and Government Objectives

Question 1

What is the purpose of microeconomic indicators?

Answer 1

To assess the current and future health of the national economy and its financial markets, in order to aid decisions and policies.

Question 2

What is Economic growth?

Answer 2

GDP is the value of all newly produced final goods and services produced in an economy within a given time period.

Question 3

How is Economic growth measured?

Answer 3

Real Gross Domestic Product, or real GDP (GDP adjusted for inflation).

Question 4

What does GDP measure?

Answer 4

GDP measures the total value of everything - goods and services - produced in our economy.
Basically measures the yearly value of output produced by a economy.

Question 5

What is the difference between nominal GDP and real GDP?

Answer 5

Nominal GDP is the total value of all goods and services produced in a given time period, usually quarterly or annually. Real GDP is nominal GDP adjusted for inflation.

Question 6

How is GDP per capita measured?

Answer 6

Calculated by dividing the GDP of a country by its population.

Question 7

What is the definition for inflation?

Answer 7

Inflation is the rate of increase in prices over a given period of time.

Question 7

How is the value of money effected when there is inflation?

Answer 7

The impact inflation has on the value of money is that it causes the value of a dollar/pound decreases over time, which reduces the purchasing power of consumers.

Question 8

How are goods and services effected by inflation?

Answer 8

Makes a basket of goods and services increasingly more expensive.

Question 9

How is inflation measured?

Answer 9

Measure inflation by comparing the cost of things today with how much they cost a year ago.

Question 10

What’s the UK’s target for inflation?

Answer 10

Inflation target of 2%

Question 11

What is the definition of unemployment?

Answer 11

Is a name representing the fact that are people who are actively searching for jobs but are unable to obtain any.

Question 12

What is the meaning of unemployment level?

Answer 12

Unemployment levels measure the total number of people estimated to be unemployed.

Question 13

How is unemployment measured?

Answer 13

Measured through the Labour Force Survey (LFS)

Question 14

What is the meaning of a claimant count?

Answer 14

The Claimant Count is a measure of the number of people claiming benefits principally for the reason of being unemployed.

Question 15

What is the labour force survey?

Answer 15

A survey directed toward households that records the number of people in unemployment, using the International Labour Organisation’s definition of unemployment (those who are out of work but are willing to find a job and are able to start within the next 2 weeks).

Question 16

What is the difference between claimant count and labour force survey as measures of unemployment?

Answer 16

LFS surveys are based on a person’s self–classification as being ‘out of work, but ‘currently and actively seeking to work’ in the Labour, while the claimant count is a count of the number of people who claim unemployment related benefits (the majority of whom claim Jobseeker’s allowance.

Question 17

What are the four categories of unemployment?

Answer 17

Frictional, Cyclical, Structural, and Seasonal.

Question 18

What is the meaning unemployment rate?

Answer 18

The proportion of unemployed people out of the economically active population (those in employment and those unemployed) or better known as the labour force.

Question 19

What is the current rate of unemployment in UK (2022)?

Answer 19

3.5%

Question 20

Why is it difficult to measure unemployment?

Answer 20

Workers who have given up actively seeking a job and those who don’t have access to benefits, are not counted in the unemployment rates.

Question 21

Why is there disagreements over what unemployment rate is?

Question 22

What is the meaning of Balance of Payments?

Answer 22

Is all the financial transactions made between consumers, businesses and the government in one country with others.

Question 23

What does the government aim to achieve in terms of trade?

Answer 23

They aim to make trading easier between countries. They do this by reducing the restrictions on imports and exports between them.

Question 24

How is the Trade Balance measured?

Answer 24

A country’s trade balance equals the value of its exports minus its imports.

Question 25

Why is balanced trade so important?

Answer 25

Balance of trade is an important factor playing into the calculation of the Gross Domestic Product of a country. As part of GDP calculations, exports are added to the calculation. Therefore, greater the trade surplus, greater the GDP of a country.

Question 26

What is labour productivity?

Answer 26

Labour productivity is the amount (volume) of output that is obtained from each employee per input of labour.

Question 27

How is labour productivity measured?

Answer 27

Output per period / number of employees at work = output per employee.

Question 28

If labour productivity increases, what does this mean for the output of an economy?

Answer 28

An economy is able to produce increasingly more goods and services for the same amount of work.

Question 29

How can a firm or government go about improving labour productivity?

Answer 29

-Investment into physical capital
-Quality of education and training of employees

Question 30

What does GDP per capita show?

Answer 30

A country’s economic output per person, which is a indirect indicator of per capita income.

Question 31

What is a ILO?

Answer 31

Labour force survey.

Question 32

What is Frictional unemployment?

Answer 32

The number of people who are classed as unemployed while they are moving between jobs.

Question 33

What is Cyclical unemployment?

Answer 33

Unemployment caused by a persistent lack of aggregate demand for goods and services.

Question 34

What is Structural unemployment?

Answer 34

Unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.

Question 35

Meaning of Seasonal unemployment?

Answer 35

Seasonal workers without jobs due to the time of year where there are seasonal changes in employment.