Macroeconomic Indicators Flashcards
What are Macroeconomic Indicators?
Data used to measure the performance of an economy, like real GDP, GDP per capita, CPI and RPI, measures of unemployment, productivity and the balance of payments on current account
What is GDP?
A measure of national income of an economy. It is based the value of all incomes earned in an economy over a period of time
What is real GDP?
Measures the value of GDP after removing the effect of price changes from its value. This ensures that an increase in GDP from one year to the next represents increased output of goods and services rather than just increases in prices
What rates does the government encourage?
Usually between 2-3%
Positive ^
What is real GDP often used for?
To make comparisons of SOL between countries
What makes comparisons more meaningful?
The average income per person- Real GDP per capita
How is real GDP per capita calculated?
Real GDP/population level
How is Economic Growth measured?
Gross Domestic Product (GDP) or GDP per capita
How is Unemployment measured?
As ‘level’ or ‘rate’
How is Inflation measured?
Using Consumer Price Index (CPI) or Retail Price Index (RPI)
How is the balance of payments measured?
The value of net exports
What does the Economic Cycle Diagram look like?
Includes Boom, Recession, Growth and Slack
What is the Trend Rate of Growth?
The underlying rate of growth
Determined by the rate of growth of productive potential
What is the Positive Output Gap?
When the economy temporarily grows faster than trend rate
What is the Negative Output Gap?
When the aggregate demand is growing at a slower rate
What is the definition of CPI/RPI?
The rate of change of the average price level over time or a sustained increase in the general price level
What causes Inflation?
Demand-Pull or Cost-Push
What is the Basket of Goods and Services?
The ‘shopping basket’ of items used in compiling the various measures of consumer price inflation are reviewed each year
How do we measure Uneployment?
Labour Force Survey and the Claimant Count
What is the Claimant Count (CC)?
Includes the number of people receiving welfare benefits for being unemployed. The usual benefit received by those unemployed is jobseekers allowance (JSA)
What is the Labour Force Survey (LFS)?
Based on a monthly sample of people, it records those who report they are looking for work but cannot find it, regardless of whether they receive benefits or not.
What are the types of Unemployment?
Cyclical, Structural, Frictional, Seasonal, Technological, Regional
What are the causes of Unemployment?
Lack of Aggregate Demand, labour immobility, unemployment trap
What is Aggregate Demand?
Known as demand deficit or cyclical unemployment
The demand for labour is derived, so a lack of demand for goods and services leads to a lack of demand for labour
What is Structural Unemployment?
When there is a difference in characteristics workers have
What is Frictional Unemployment?
The period of time when a worker is moving between jobs
What is Seasonal Unemployment?
Unemployment that occurs through seasonal fluctuations in demand throughout the year
What is Technological Unemployment?
Created through the increasing degree of automation in the production process
What is Regional Unemployment?
Typically linked to structural unemployment, a situation where a town or region experiences a downturn
What are consequences of Unemployment for individuals?
De-skilling Lower living standards Health Social Unemployment trap Longer term employability
What are the consequences of Unemployment for the Economy?
Government finances Lost output Rising inequality Loss of resources invested in training Lower consumer spending
What are the forms productivity?
Labour- is per worker
Capital- output per unit of capital
Factor- average output of all factors of production
What is the Current Account?
- Primarily records the trade in goods i.e. visibles and services i.e. invisibles
- Also includes net income flows from interest, profit and dividends from UK assets owned overseas. It therefore includes payments made overseas from assets based in the UK, but owned by foreign MNCs
- Includes overseas aid payments and payments to the European Union
What is the Capital Account?
Primarily records international flows of capital such as inter-country loans or government investments overseas
What is the Financial Account?
- Primarily records net Foreign Direct Investment (FDI)
- Also includes government owned assets such as gold, currency reserves and private assets held abroad It will also include short-term capital flows, such as speculative movements on currency or share investments e.g. hot money
What does the Balance of Payment include?
The Current Account, Capital Account and The Financial Account
