Th4.1: Measures of International Competitiveness

Question 1

What are the two measures of international competitiveness?

Answer 1

relative unit labour costs

relative export prices

Question 2

Relative unit labour costs

Answer 2

unit labour costs are wages divided by real output - the cost of employing workers for each unit of good

Question 3

What are relative unit labour cost measured in?

Answer 3

an index number

Question 4

What does a rise in the relative unit labour costs in the UK show?

Answer 4

that labour cost per unit is rising faster in the UK compared to other countries and so the UK is becoming less competitive

Question 5

Relative export prices

Answer 5

this is the price of UK exports compared to the exports of the UK’s main trading partners

Question 6

What does a rise in relative export prices mean?

Answer 6

UK export prices have risen more than other countries’ export prices and so the UK has become less competitive