Measuring Economic Performance Flashcards
What are the four main macroeconomic indicators
rate of economic growth
rate of inflation
level of unemployment
state of the balance of payments
What is national output measured in?
By value, which is GDP
GDP is equal to…
national income and national expenditure (AD)
What is the rate of economic growth?
the speed at which the national output grows over a period of time
What can GDP per capita be an indicator of?
standard of living
What is Purchasing Power Parity (PPP)?
the real value of a money in terms of what you can actually buy with it
How can we use PPP to compare living standards?
adjust GDP per capita to account for differences in PP in those countries
What is inflation?
the sustained rise in average price of goods and services over a period of time
If there is a fall in value of money, what can be said?
the purchasing power of money has fallen
What’s the difference between disinflation and deflation?
disinflation - slowing down the rate of inflation
deflation - the average price is falling
What’s the difference between RPI and CPI?
CPI excludes mortgage interest payments and council tax
It uses a larger sample and a different formula
What is the LEVEL of unemployment?
the number of people who are looking for a job but cannot find one
What is the RATE of unemployment?
the number of people out of work as a percentage of the labour force
What are the two ways to measure unemployment?
Claimant count
The labour force survey by ILO
What is a deficit in the current account on the balance of payments?
Imports exceed exports
