Measurement of macroeconomic performance

Question 1

SHORT RUN ECONOMIC GROWTH

Answer 1

growth of real output due to the use of idle resources

Question 2

LONG RUN ECONOMIC GROWTH

Answer 2

an increase in the economy’s potential level of real output (outward shift of the PPF)

Question 3

GDP

Answer 3

the sum of all goods and services produced in a period of time

Question 4

REAL GDP

Answer 4

a measure of all goods and services produced in a period of time adjusted for inflation

Question 5

NOMINAL GDP

Answer 5

GDP measure at current market prices (without removing the effect of inflation)

Question 6

RECESSION

Answer 6

a fall in real GDP for 6 months or more

Question 7

FULL EMPLOYMENT (Beveridge)

Answer 7

when 3% or less of the labour force is unemployed

Question 8

FULL EMPLOYMENT (Free-market)

Answer 8

where the number of employers wish to hire equals the number of workers seeking work

Question 9

CLAIMANT COUNT

Answer 9

method of measuring unemployment according to those who are claiming job seekers allowance

Question 10

LABOUR FORCE SURVEY

Answer 10

The Labour Force Survey counts those who are without any kind of job including part time work but who have looked for work in the past month and are able to start work immediately

Question 11

INFLATION

Answer 11

a persistent rise in the average price level

Question 12

DEFLATION

Answer 12

A persistent fall in the average price level .

Question 13

DISINFLATION

Answer 13

when the rate of inflation is falling but is still positive

Question 14

CPI

Answer 14

the official measure used to calculate the rate of consumer price inflation in the UK

Question 15

BALANCE OF PAYMENTS

Answer 15

A record of all the currency flows into and out of a country in a particular time period

Question 16

CURRENT ACCOUNT OF THE BOP

Answer 16

measures all the currency flows into and out of a country in a particular time period in payment for imports and exports

Question 17

EXPORTS

Answer 17

domestically produced goods and services sold in other countries

Question 18

IMPORTS

Answer 18

goods and services produced in other countries and sold domestically

Question 19

BALANCE OF TRADE

Answer 19

the difference between a country’s total exports and total imports

Question 20

TRADE DEFICIT

Answer 20

money value of imports exceeds that of exports

Question 21

TRADE SURPLUS

Answer 21

money value of exports exceeds that of imports

Question 22

BALANCED BUDGET

Answer 22

when government spending equals government revenue (mostly tax)

Question 23

BUDGET DEFICIT

Answer 23

When government spending is greater than government revenue

Question 24

POLICY CONFLICTS

Answer 24

when two policy objectives cant be achieved at the same time

Question 25

MONETARY POLICY

Answer 25

the use of interest rates (among other things) to try and achieve the governments policy objectives

Question 26

FISCAL POLICY

Answer 26

the use of government spending and taxation to achieve the desired policy objectives

Question 27

GDP

Answer 27

The total output of an economy over a period of time

Question 28

Wealth effect

Answer 28

When consumer or corporate spending is affected by a change in the value of an asset, such as property prices or share prices.

Question 29

Boom

Answer 29

Growing real GDP at an increasing rate. There is likely to be a positive output gap.

Question 30

Depression

Answer 30

If an economy is unable to recover from a recession

Question 31

Negative output gap

Answer 31

The level of actual real output in the economy is lower than potential GDP

Question 32

Positive output gap

Answer 32

The level of actual real output in the economy is greater than potential GDP

Question 33

Demand shocks

Answer 33

Unexpected changes in the demand for goods and services

Question 34

Cyclical unemployment

Answer 34

Unemployment that rises during economic downturns

Question 35

Supply side shocks

Answer 35

Unexpected and significant changes in the price of factors of production or the availability of factors of production

Question 36

CPI

Answer 36

Measures average inflation across a range of goods and services to show the average cost of living

Question 37

RPI

Answer 37

CPI + mortgages

Question 38

Index number formula

Answer 38

(value / base year) x 100