The measurement of macroeconomic performancee

Question 1

4 Main Macroeconomic Objectives

Answer 1

Sustainable Economic Growth

Satisfactory Balance of Payments

Low Unemployment / Full Employment

Price Stability

Question 2

Philips Curve

Answer 2

It shows the relationship between the rate of inflation and unemployment so shows there is a trade off between them

Question 3

Real GDP

Answer 3

Measures the quantity of goods/services produced by an economy whilst taking into consideration inflation

Question 4

Nominal GDP

Answer 4

Measures the quantity of goods/services produced by an economy without taking into consideration inflation

Question 5

Real GDP per Capita

Answer 5

Value of Real GDP divided by population of the country

Question 6

Consumer Price Index (CPI)

Answer 6

Official measure of inflation by telling the public how much the cost of goods/services has increased over a year using a representative basket of household items

Question 7

Retail Price Index (RPI)

Answer 7

Another way of measuring price changes but includes the cost of living in it’s basket (e.g. mortgages)

Question 8

The Claimant Count

Answer 8

Counts the number of people claiming unemployment benefits like the Job Seekers Allowance

Question 9

Labour Force Survey

Answer 9

44000 households are surveyed each quarter to determine the unemployment rate

Question 10

Balance of Payments

Answer 10

The record of all economic/financial transactions from one country to others so states how much is spent on imports and gained from exports

Question 11

Current Account

Answer 11

This is the value of imports and exports as well as international transfers of capital

Question 12

Index Number Equation

Answer 12

(New Price / Base Year Price) x 100

Question 13

Gross National Product (GNP)

Answer 13

The total value of all goods/services produced in a year by a country’s residents

Question 14

Gross National Income (GNI)

Answer 14

Total domestic and foreign output claimed by the residents of a country

Question 15

Exchange Rate

Answer 15

The price of a currency measured in terms of another

Question 16

Marginal Propensity to Consume (MPC)

Answer 16

Proportion of an increase in income spent on consumer expenditure

Question 17

Policy Instrument

Answer 17

Tools or set of tools which are used to try and meet a policy objective

Question 18

Policy Objective

Answer 18

Target or goal which policy-makers aim to hit

Question 19

National wealth

Answer 19

Stock of all goods with value in an economy