Measurement of economic performance and living standards

Question 1

What is a leading indicator?

Answer 1

provides information about changes in the economy in advance of it occurring on the trade cycle.

Question 2

What is a coincident indicator?

Answer 2

provides information about changes in the economy at the same time as a change occurring on the trade cycle

Question 3

What is a lagging indicator?

Answer 3

provides information about changes in the economy following changes occurring on the trade cycle

Question 4

What is economic growth?

Answer 4

Economic growth is a sustained increase in the productive capacity of an economy usually indicated by the increased availability of goods and services in the economy

Question 5

What percentage range is sustainable economic growth?

Answer 5

3.5%-4.5%

Question 6

What percentage is considered to be maintained?

Answer 6

3.5%

Question 7

What happens when the economic growth percentage is over 4.5%?

Answer 7

it threatens inflation and inflationary expectations

Question 8

Define living standards.

Answer 8

Living standards refer to the level of material comfort individuals, groups or nations enjoy.

Question 9

How are living standards measured?

Answer 9

They are often measured by the size of income and wealth of individuals, groups or nations.

Question 10

What is the difference between income and wealth?

Answer 10

Income is the inflows of money received over a specified period of time by individuals. Households or businesses from the ownership of the factors of production or unearned income. Whereas wealth is the total assets owned by an individual, household or business and include physical assets including: real estate, cars, boats, jewellery, plant and equipment and financial assets.

Question 11

What is the Lorenz curve?

Answer 11

The Lorenz curve measures relative standards of living in a nation. The Lorenz curve is a graph that depicts the level of inequality in a nation.

Question 12

What is the Gini coefficient?

Answer 12

The Gini coefficient is a numerical value, a numerical measure of inequality.

Question 13

How many quintiles or income units is the Lorenz curve broken into?

Answer 13

5 quintiles or income units

Question 14

What is the percentage of each quintile?

Answer 14

Each quintile represents 20% of income earners

Question 15

What does the vertical axis depict on the Lorenz curve?

Answer 15

The vertical axis shows the corresponding correlative portion of income represents as a percentage. The correlative portion not income is broken into five equivalised portions each representing 20% of the total income

Question 16

What is the diagonal line through the origin of the graph called?

Answer 16

The diagonal line through the origin of the graph is called the line of perfect equality. It is called this because it represents income distributed evenly across the population where each of the five quintiles has an equal chare of income (20% each)