Measures of economic performance Flashcards
what does aggregate mean
total
what is meant by macroeconomics
the study of the whole economy and how it works, rather than individuals and markets
how do we judge whether an economy is performing well
by using statistics on key performance indicators at a macro or aggregate level, such as economic growth, unemployment, inflation and the balance of payments. we can compare data over time or against other countries to measure performance
sources of data
ONS, Bank of England, IMF/world bank
how do you calculate percentage change
(new-old)/old x 100
what is an index number
a way of comparing the value of a variable with a base year. because the base year has a value of 100, to get the percentage change in the variable you just need to subtract 100 from the current index number. index numbers are useful when looking at data where there is no meaningful unit of measurement, such as the rate of change in the price level.
define the underlying rate of economic growth
this is the average rate of growth over a long time period, such as 50 years
define the actual rate of economic growth
it is calculated by working out the rate of change in GDP over a time period, rather than the average across many time periods
what is potential economic growth
an increase in the productive potential of an economy
how is actual economic growth measured
(new GDP - old GDP)/old GDP x 100
distinguish between nominal and real gross domestic product (GDP)
the value of GDP in current prices is nominal GDP, but real GDP is adjusted for inflation, so that more meaningful comparisons can be made over time
distinguish between total and per capita GDP
total GDP is the sum of all output in an economy, and does not take into account population size, whereas per capita GDP is the average output per person and does take into account population size
distinguish between the volume of GDP and the value of GDP
volume refers to the amount of goods and services produced, whereas value refers to the total number of goods produced multiplied by the price
what is meant by gross national product (GNP)
gross national product also takes into account net income receipts from overseas business producing abroad and vice versa, so output that is produced overseas, but accrued back to UK businesses is added, and overseas business who are producing in the UK will be subtracted
what is meant by gross national income (GNI)
GDP plus net income from abroad such as UK citizens earning money abroad and bringing it back into the UK and vice versa
