measurement of macroeconomic performance Flashcards
1
Q
What are macroeconomic objectives
A
governments aims for economy
2
Q
What are macroeconomic policies
A
tools used by government to achieve aims
3
Q
What are macroeconomic indicators
A
How governments measure achievement of aims
4
Q
What are the 4 main variables used to measure national economic performance
A
- Economic growth
- Unemployment
- Inflation
- Balance of payments (effectively been ignored since 70s)
5
Q
What is growth
A
- The rate of change of a country’s output, measured in GDP
6
Q
Benefits of growth
A
- Job creation
- Rising incomes
- Standard of living increase
- Improved International competitiveness
- Improved consumer and investor confidence
7
Q
What is unemployment
A
- Actively seeking work, but unable to find a job
- A waste of resources and indication of poor economic performance
8
Q
Benefits of low unemployment
A
- Higher consumption
- Improved living standards
- Higher tax revenue
- Lower govt spending on unemployment related welfare
- improved productivity
- reduced poverty
9
Q
What is inflation
A
- The rate of change of average prices in an economy
10
Q
What does inflation effect
A
- Value of money, workers wage demands and consumer confidence
- erodes spending power at high levels
11
Q
What is inflation target
A
- 2%
12
Q
Who’s job is it to reach inflation target
A
- Bank of England
13
Q
What is balance of payments
A
- Measures UK’s economic activities with other countries
14
Q
What is a surplus in balance of payments
A
- Exports>imports
15
Q
What is a deficit in balance of payments
A
- Imports>exports
16
Q
What does a deficit in balance of payments mean
A
They have to be funded by borrowing
17
Q
Current state of balance of payments in UK
A
- Sustained persistent deficit on balance of payments, however receiving little attention from govt
18
Q
How is inflation measured
A
- Consumer prices index (CPI) preferred
- Retail prices index (RPI)
