The measurement of macroeconomic performance Flashcards
What are the four macroeconomic objectives?
Economic growth
Low inflation
Low unemployment
Stable BOP
What does GDP stand for?
Gross Domestic Product
What does GDP measure?
The total value of output in a year
What’s the difference between Real and Nominal GDP?
Real GDP takes inflation/price levels into account, whilst Nominal GDP does not
Side note - most economists use Real GDP
What is inflation?
A rise in the price level
What is disinflation?
A decrease in inflation
Side note - keep in mind that disinflation does not mean price levels are falling
What is deflation?
A fall in the price level
Name and give the difference between the two measures of inflation used in the U.K.
RPI - includes household costs
CPU - excludes household costs
What is the U.K. governments target for inflation?
2% per annum
What are the two measures of unemployment in the U.K.?
Claimant count
International Labour Office (ILO)
What is the balance of payments (BOP)?
It records transactions between U.K. residents and the rest of the world
What does the current account of the BOP consist of?
The balance of trade in goods and services
Income flows
Transfers
What are index numbers used to display?
Economic data
What are index numbers based on?
The base figure, which usually stands at 100
