MACRO 1 - Measurements of Macroeconomic performance

Question 1

What do the 4 government objectives aim to do?

Answer 1

provide macro stability

Question 2

What is the economic growth trend?

Answer 2

2.5%

Question 3

What type of economic growth do the government aim to achieve?

Answer 3

aims to have sustainable economic growth in the long run

Question 4

What might developing countries do before of economic growth?

Answer 4

they may aim to increase economic development

Question 5

What is the unemployment target?

Answer 5

4% - 5%

Question 6

What is unemployment?

Answer 6

the % of the workforce (18 to 65 years) who are willing to work and are looking for a job

Question 7

What is the inflation target?

Answer 7

2%

Question 8

What is inflation measured by?

Answer 8

CPI (consumer price index)

Question 9

What is deflation?

Answer 9

when prices fall

Question 10

What is the balance of payments?

Answer 10

the difference between exports and imports at a given point in time

Question 11

What is the BofP affected by?

Answer 11

exchange rates

Question 12

What is the current account?

Answer 12

goods, services, incomes and investment incomes

Question 13

What is the financial account?

Answer 13

foreign direct investments and savings

Question 14

What is the capital account?

Answer 14

buying fixed assets e.g. land

Question 15

What are other possible government priorities/objectives?

Answer 15

budget/national debt, economic wellbeing, regional balance, improved public services, environmental sustainability, improved competitiveness

Question 16

What are some conflicting objectives?

Answer 16

• economic growth v inflation
• unemployment v inflation
• economic growth v BofP
• budget deficit v economic growth
• economic growth v environment

Question 17

What is the equation for real GDP?

Answer 17

real GDP = nominal GDP - inflation

Question 18

What is a boom?

Answer 18

long periods of high economic growth

Question 19

What is a recession?

Answer 19

negative economic growth for 2 consecutive quaters

Question 20

What is an economic slump?

Answer 20

a long recession

Question 21

What is an economic depression?

Answer 21

long and sustained negative economic growth (for several years)

Question 22

What is the consumer price index?

Answer 22

measures inflation, and measures household purchasing power with the “Family Expenditure survey”

Question 23

What is the “basket of goods”?

Answer 23

a collection of items used to measure changes in the cost of living and inflation by tracking the prices of commonly consumed goods and services over time

Question 24

What is unemployment level?

Answer 24

the number of people looking for a job

Question 25

What is unemployment rate?

Answer 25

the number of people out of work as a % of the labour force

Question 26

What is the Claimant count?

Answer 26

a figure that counts the number of people claiming unemployment related benefits e.g. Job Seekers Allowance (it must be proven)

Question 27

What is the UK labour force survey?

Answer 27

a survey that asks people if they meet the following requirements: - out of work for 4 weeks - able & willing to start in 2 weeks - should be able to work 1 hour a week

Question 28

What is productivity?

Answer 28

output per worker per period of time

Question 29

Why are index numbers good?

Answer 29

- they make easier comparisons between data - makes large numbers more simple to use

Question 30

Equation for index numbers:

Answer 30

new IN - original IN / original IN x 100

Question 31

What is the % change for index numbers?

Answer 31

new year / base year x 100

Question 32

What does purchasing power parity do?

Answer 32

- adjusts when comparing standards of living in countries - items should cost the same in different countries - your income allows you to buy everything you need

Question 33

What are the 4 government objectives?

Answer 33

- unemployment - stable balance of payments - inflation - sustainable economic growth