macro economic indicators Flashcards
what did macro economic indicators provide?
Macroeconomic indicators provide a snapshot of the economic performance
what does the data from macro economic indicators help ?
helps policymakers, economists, investors and businesses make informed decisions
how do we measure unemployment?
the claimant court
labour force survey
how do we measure inflation?
consumer price index (CPI)
retail price index (RPI)
how do we measure economic growth?
nominal GPD
real GDP
real GDP per capita
what do policy makers use the data from?
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
what are the 3 common indicators used to measure economic growth?
nominal GDP
Real GDP
Real GDP per Capita
what in nominal GDP
The value of all goods and services produced in an economy in a one-year period
what is real GDP per capita?
The real GDP is divided by the total population of a country so as to give an average $ amount of real GDP/person
what is real GDP
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
what is the equation is real GDP per capita ?
real GDP = Real GDP ÷ population
what is inflation?
Inflation is a sustained increase in the general price level of an economy
what is CPI?
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
what is RPI?
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
what is the CPI equation ?
CPI = cost of basket in year X ÷ cost of basket in base year
what does the percentage difference between CPI show ?
The percentage difference in CPI between the two years is the inflation rate for the period
what is ILO Labour force Survey ?
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
what is the claimant count?
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’
equation for unemployment rate
no. actively seeking ÷ total labour force x 100
employment rate equation
no. in employment ÷ population of working age x 100
labour force participation rate
labour force ÷ total population x 100
what can happen even if employment rate is increasing ?
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
what may unemployment rates not capture ?
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
