Measures Of Economic Performance Flashcards
defenition of inflation
The sustained rise in general prices
Defenition of unemployment
The number of people out of work which are actively looking willing and capable of working
Defenition of economic growth
The total value or good and services produced within a country over a period of time
Detention of economic development
A measure of the welfare of people in society
Issues associated with using economic GROWTH
It does not consider the income gap between people in the country and doesn’t show income distribution
Problems with unemployment
It’s a waste of scarce resources
Output can be higher if everyone was employed
Unemployment measures
-Labour force survey
-claimant count
Uks goal for unemployment
(Unofficialy)4%
UKs goal for inflation rates
2% + - 1
Problems with inflation
Reduces people’s spending power and disrupts people knowledge or prices
Balance of payments definition
Are all the payments in and out of the country
Problems with balance of payments
It doesn’t take into account informal payments such as the shadow market and doesn’t include transfer payments
National income definition
The total value of goods and services produced within a country
What is cpi
A measure of inflation/stands for customer price index
Limitations of cpi
CPI assumes a substitution bias (assumes spending patterns are the samewhen they are likely to change)
And doesn’t take into account quality of goods and services changing so there may be an overestimation of price increases
