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Macroeconomics > macro economic objectives and indicators > Flashcards

macro economic objectives and indicators Flashcards

1
Q

economic growth definition?

A

the change in national income measured over a period of time

(how much the value of the output produced in an economy has grown over a period of time)

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2
Q

What is price stability?

A

how fast the average level of prices of a range of goods and services rises over a period of one year

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3
Q

What are the macroeconomic objectives?

A
  • economic growth
  • price stability
  • minimising unemployment
  • stable balance of payments on current account
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4
Q

what is a policy conflict?

A
  • attempts to achieve one economic objective move us further away from another economic objective
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5
Q

Give examples of policy conflicts?

A

minimising unemployment and achieving price stability.

  • reducing unemployment often comes at the expense of prices rising
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6
Q

What is GDP?

A
  • gross domestic product - measure of the national income of the economy. Based on the value of all incomes earned in the economy over a period of time
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7
Q

What does real GDP measure?

A

the value of GDP after adding the effect of price changes (inflation)

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8
Q

What is normal GDP growth per year?

A

2% and 3%

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9
Q

What is real GDP used for ?

A

comparison between countries in terms of standard of living

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10
Q

How is real GDP per capita calculated?

A

real GDP / population level

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11
Q

What does per capita mean?

A

a variable adjusted to give an average amount per person

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12
Q

What do CPI and RPI measure?

A

measure of price level which records rate of inflation

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13
Q

How do the CPI and RPI help measure inflation?

A

they measure the prices of goods and services typicaly bought by households in the UK

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14
Q

What does unemployment mean?

A

those of working age who are currently out of work but are actively seeking work

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15
Q

What is the labour force?

A

those of working who are either in work or actively seeking work

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16
Q

What are the UKs two main measures of unemployment?

A
  • claimant count

- labour force survery

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17
Q

What is the claimant count?

A

the measure of unemployment in the UK that counts those who are recieving unemployment benefits

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18
Q

What is the labour force survey?

A

based on a monthly sample of people, records those who report they are looking for work but cannot find it, regardless of benefits

19
Q

What is the unemployment rate?

A

the number of unemployed people expressed as a percentage of the current labour force

20
Q

How do you calculate unemployment rate?

A

number of people unemployed / size of labour force x100

21
Q

What does productivity measure?

A

a measure of efficiency comparing the level of output with the level of inputs

22
Q

What is labour productivity?

A

the output of the workforce compared with the amount of labour used to produce the output

23
Q

What is capital productivity>

A

the output per item of capital equipment measured over a period of time

24
Q

What does economic growth in the long run involve?

A

comes from improvements in productivity

25
Q

How do you improve productivity?

A

making workers more efficient in producing output and increasing efficiency of the economy’s capital equipment

26
Q

What is the balance of payments?

A

the record of all financial transactions between the UK and the rest of the world

27
Q

What are the three balance of payment sections?

A
  • current account
  • capital account
  • financial account
28
Q

Define current account?

A
  • part of the balance of payments which looks at income flows earned through either trade in goods and services or the reward for investments located overseas
29
Q

What is the current account made up of?

A
  • exports of goods and services (produced in UK and sold abroad)
  • imports of goods and services ( produced abroad, purchased by UK)
30
Q

What is the balance of trade ?

A

the differance between imports and exports of goods and services

31
Q

What is a trade surplus?

A

value of exports > value of imports

32
Q

What is a trade deficit?

A

value of exports < value of imports

33
Q

What is a current acount deficit?

A

flows of money from trade and other incomes out of the country are greater than the equivalent flows into the country

34
Q

What is an index number?

A

a number designed to be used to show the size of changes in a variable over time

35
Q

What are index numbers useful for?

A

making comparisons over a period of time

36
Q

How do you calculate index number?

A

new price / base year price x100

37
Q

What does CPI stand for?

A

consumer price index

38
Q

how is inflation rate calculated in the UK

A

anual % change in the CPI

39
Q

what is the price index?

A

an average level of prices based on a selection of goods bought by the typical household

40
Q

How is CPI calculated?

A

using price data from a variety of differant products bought by an imaginary family

based on basket of goods and services

41
Q

What is the basket of goods and services

A

the selection of prducts to be included within the price index based on typical household purchases

42
Q

What type of index is CPI?

A

weighted price index

43
Q

What is a weighted price index?

A

an average level of prices adjusted so that the price changes in popular items affect the price index more then price changes in less popular items

44
Q

What are problems with the CPI?

A
  • never really reflects anyones exact spending pattern
  • the basket may include goods not everyone buys
  • regular updates to the basket mean we are not comparing like with like
  • no account is taken for the quality of the item

Macroeconomics (9 decks)

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