Measurement of Macroeconomic Objectives

Question 1

What are the 4 main macroeconomic objectives?

Answer 1

1) Balanced balance of payments
2) Low unemployment
3) High Economic Growth
4) Low and Stable inflation

Question 2

Other objectives

Answer 2

1) Balanced budget
2) more equal distribution of income
3) Protection of the environment

Question 3

Economic growth

Answer 3

the change in national income measured over a period of time

Question 4

balance of payments

Answer 4

the record of financial transactions between the Uk and the rest of the world

Question 5

Government’s budget

Answer 5

the value of government spending compared with the money earned through taxation over a period of itme

Question 6

Distribution of income

Answer 6

how evenly incomes are shared between individuals and households across the economy

Question 7

Policy conflict in the short run

Answer 7

reducing level of unemployment

prices rise at a faster rate

Question 8

What is most likely lead to a deteriorated Balance of Payments?

Answer 8

UK labour productivity compared to the rest of the world

Question 9

Reduction in current account surplus?

Answer 9

• growth falls
• inflation rises
• productivity falls

Question 10

GDP

Answer 10

the value of all newly produced final goods and services produced in an economy within a given time period.

Question 11

national income

Answer 11

the total income generated within an economy over a period of time

Question 12

real GDP

Answer 12

• value of GPD after removing effect of inflation

- used to make comparisons between countries in terms of living standards

Question 13

real GDP per capita

Answer 13

real total GDP / population level

Question 14

What are the indicatiors for inflation

Answer 14

CPI

RPI

Question 15

inflation

Answer 15

an increase in the average level of prices measured over a period of time

Question 16

Labour force

Answer 16

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

Question 17

Economically inactive

Answer 17

those of working age who are not in work and not seeking work

Question 18

Unemployment

Answer 18

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

Question 19

claimant count

Answer 19

the number of people receiving welfare benefits for unemployment

Question 20

Labour force survey

Answer 20

records people who are looking for work but can’t find it- regardless of whether they receive benefits or not
-used to produce an estimate of the national unemployment level

Question 21

unemployment rate

Answer 21

number of people unemployed / size of labour force x 100

Question 22

What is the BoP divided into

Answer 22

• current account
• capital account
• financial account

Question 23

Current account

Answer 23

part of the BoP that looks at the net income flows earned through either trade in goods and services or the reward from investments located overseas

Question 24

current account deficity

Answer 24

imports > exports

Question 25

index number

Answer 25

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