macro economic indicators

Question 2

what did macro economic indicators provide?

Answer 2

Macroeconomic indicators provide a snapshot of the economic performance

Question 3

what does the data from macro economic indicators help ?

Answer 3

helps policymakers, economists, investors and businesses make informed decisions

Question 4

how do we measure unemployment?

Answer 4

the claimant court
labour force survey

Question 5

how do we measure inflation?

Answer 5

consumer price index (CPI)
retail price index (RPI)

Question 6

how do we measure economic growth?

Answer 6

nominal GPD
real GDP
real GDP per capita

Question 7

what do policy makers use the data from?

Answer 7

use the data from economic growth, inflation, unemployment, and the balance of payments to assist in formulating and evaluating progress towards their objectives
The indicators provide a means of making historical and international comparisons

Question 8

what are the 3 common indicators used to measure economic growth?

Answer 8

nominal GDP
Real GDP
Real GDP per Capita

Question 9

what in nominal GDP

Answer 9

The value of all goods and services produced in an economy in a one-year period

Question 10

what is real GDP per capita?

Answer 10

The real GDP is divided by the total population of a country so as to give an average $ amount of real GDP/person

Question 11

what is real GDP

Answer 11

This is nominal GDP that is adjusted for inflation. E.g. If nominal GDP is £100bn and inflation is 10%, then real GDP is £90bn

Question 12

what is the equation is real GDP per capita ?

Answer 12

real GDP = Real GDP ÷ population

Question 13

what is inflation?

Answer 13

Inflation is a sustained increase in the general price level of an economy

Question 14

what is CPI?

Answer 14

Consumer price index
The CPI is an index that measures the change in the price of a fixed basket of consumer goods bought by a typical household

Question 15

what is RPI?

Answer 15

Retail price Index
certain goods and services that are excluded from the CPI are included with the RPI
These include council tax, mortgage interest payments, house depreciation, and other house purchasing costs such as estate agents fees

Question 16

what is the CPI equation ?

Answer 16

CPI = cost of basket in year X ÷ cost of basket in base year

Question 17

what does the percentage difference between CPI show ?

Answer 17

The percentage difference in CPI between the two years is the inflation rate for the period

Question 18

what is ILO Labour force Survey ?

Answer 18

An extensive survey is sent to a random sample of households every quarter (60,000 households in the UK)
Respondents self-determine if they are unemployed based on the following ILO criteria
Ready to work within the next two weeks
Have actively looked for work in the past month

Question 19

what is the claimant count?

Answer 19

Counts the number of people claiming job seekers allowance or unemployment benefits
There is a more stringent requirement to be considered unemployed than with the ILO survey
It often requires claimants to meet regularly with a ‘work coach’

Question 20

equation for unemployment rate

Answer 20

no. actively seeking ÷ total labour force x 100

Question 21

employment rate equation

Answer 21

no. in employment ÷ population of working age x 100

Question 22

labour force participation rate

Answer 22

labour force ÷ total population x 100

Question 23

what can happen even if employment rate is increasing ?

Answer 23

The employment rate could be increasing even as the unemployment rate is increasing
This may be caused by increased immigration, which causes the working age population to increase
This may be caused as people move from being economically inactive to employed

Question 24

what may unemployment rates not capture ?

Answer 24

Unemployment rates do not capture the hidden unemployment that occurs in the long term
Workers look for a job but may eventually give up and become economically inactive
This actually improves the unemployment rate, as fewer people are actively seeking wor

Question 25

what does balance of payments measure ?

Answer 25

measures the flow of money in and out of a country in a specified time period (usually a month, quarter, or year)

Question 26

what does current account represent?

Answer 26

It represents the flow of trade (exports - imports) in goods and services
It also includes net income payments (the difference between income flowing in and out of a country)

Question 27

what is a trade deficit ?

Answer 27

A trade deficit is when a country’s imports exceed its exports during a given time period.

Question 28

what is a trade surplus?

Answer 28

A trade surplus is when a country’s exports exceed its imports during a given time period. Balance of trade = exports - imports

Question 29

difference between budget deficit and current account deficit ?

Answer 29

The Budget deficit occurs when: UK Government spending > UK Government revenue (tax receipts).

The Current Account deficit refers to the BOP.