Macroeconomic indicators Flashcards
What does real GDP per capita indicate about an economy?
Real GDP per capita measures average income per person in an economy, adjusted for inflation, and provides insight into the standard of living.
What is the Consumer Price Index (CPI), and what does it measure?
CPI measures changes in the average prices of a “basket” of goods and services consumed by households, indicating inflation and price stability.
How does the Retail Price Index (RPI) differ from the Consumer Price Index (CPI)?
RPI includes housing costs such as mortgage interest payments, while CPI does not, making RPI generally higher and more reflective of cost-of-living changes.
Why are CPI and RPI important for economic analysis?
Both indices are used to measure inflation, which affects purchasing power, wage negotiations, and monetary policy decisions.
What is measured by unemployment data, and why is it significant?
Unemployment data measures the proportion of the labour force without jobs but actively seeking work. It’s significant for assessing economic health, labour market strength, and social welfare needs.
What is the difference between the claimant count and the Labor Force Survey (LFS) in measuring unemployment?
The claimant count includes those claiming unemployment benefits, while the LFS is a broader survey that includes all unemployed individuals actively seeking work, regardless of benefits.
Why is productivity an important macroeconomic indicator?
Productivity measures output per worker or per hour worked, and is critical for assessing efficiency, competitiveness, and potential for economic growth.
What does the balance of payments on the current account measure?
The balance of payments on the current account records all trade in goods and services, income, and current transfers between an economy and the rest of the world.
Why is a stable current account balance important for an economy?
A stable current account balance helps prevent excessive foreign debt, supports currency stability, and reflects sustainable trade levels.
What could a persistent current account deficit indicate about an economy?
A persistent deficit may indicate that an economy is relying heavily on imports over exports, leading to debt accumulation and potential currency depreciation.
How can real GDP and productivity data together provide insights into economic health?
Real GDP shows overall growth, while productivity reflects efficiency. Together, they indicate whether growth is sustainable and whether resources are being used effectively.
