The Measurement of Macro Economic Performance Flashcards
Macro Economics
The study of the whole economy at the aggregate level
Policy Objective
A target or goal that policymakers aim to hit
Short-run Economic Growth
The growth of real output resulting from using idle resources, including labour, thereby taking up the slack in the economy
Long-run Economic Growth
An increase in the economy’s potential level of Real Output, and an outward shift of the economy’s production possibility frontier
GDP
The sum of all goods and services, or level of output, produced in the economy over a period of time
Real GDP
A measure of all the goods and services produced in an economy, adjusted for inflation. The adjustment transforms changes in nominal GDP, which is measured in money terms, into a measure that reflects changes in the total output of the economy
Nominal GDP
GDP measured at the current market prices, without removing the effects of inflation
Recession
A fall in GDP for 2 consecutive quartiles
Full Employment
The level of employment occurring at the market-clearing real-wage rate, where the number of workers whom employers wish to hire equals the number of workers wanting to work
Claimant Count
The method of measuring unemployment according to those people who are claiming unemployment-related benefits e.g. Jobseekers allowance
Labour Force Survey
A quarterly sample survey of households in the UK. Its purpose is to provide information on the UK labour market. The survey seeks information on respondents’ personal circumstances and their labour market status during a period of 1 - 4 weeks
Inflation
A persistent or continuing rise in the average price level
Deflation
A persistent or continuing fall in the average price level
Disinflation
When the rate of inflation is falling, but is still positive
Price index
An index number showing the extent to which a price, or a ‘basket’ of prices, has changed over a month, quarter or year, in comparison to the prices in a base year
Consumer Price index (CPI)
The official measure used to calculate the rate of consumer price inflation in the UK. The CPI calculates the average price increase of a basket of 700 different consumer goods and services
Retail Prices Index (RPI)
The RPI is an older measure used to calculate the rate of consumer price inflation in the UK
What does the UK use CPI for?
Indexation of state pensions, welfare benefits and for setting a monetary policy target
What does the UK use RPI for?
The updating of the cost of TV and motor vehicle licences, together sometimes with taxes on goods such as alcoholic drinks
Indexation
The automatic adjustment of items such as pensions and welfare benefits to changes in the price level, through the use of a price index
Balance of Payments
A record of all the currency flows into and out of a country in a particular time period
Current Account of the Balance of Payments
Measures all the currency flows into and out of a country in a particular time period in payment for exports and imports, together with income and transfer flows
Exports
Domestically produced goods or services sold to residents of other countries
Imports
Goods or services produced in other countries and sold to residents of this country
Balance of Trade
The difference between the money value of a country’s imports and it’s exports. Balance of trade is the largest component of a countries balance of payments on current account
Balance of Trade Deficit
The money value of a country’s imports exeeds the money value of its exports
Balance of Trade Surplus
The money value of a country’s exports exeeds the money value of its imports
Balanced Budget
when government spending equals governemnt revenue, which is most likely tax revenue
Budget Deficit
When government spending greater than governement revenue
Policy Conflict
Occurs when two policy objectives cannoyt both be achieved at the same time: the better the performance of achieving one objective, the worse the performance in achieving the other
