The Measurements of Macroeconomic Performance Flashcards
What is the approach where the government does not intervene in the economy called?
Laissez-faire.
What are the four main economic objectives?
- Economic growth (positive and sustainable).
- Low inflation (price stability).
- Low unemployment.
- A stable balance of payments on current account.
What are the four macroeconomic indicators?
- Economic growth.
- Inflation.
- Unemployment.
- The balance of payments.
Define economic growth.
Economic growth is an increase in national output, and thus real GDP, over a given period of time.
Define nominal growth.
The increase in GDP before inflation has been accounted for.
Likewise nominal GDP is GDP before inflation has been account for.
Define real growth.
The increase in GDP after inflation has been adjusted for.
Likewise real GDP is GDP after inflation has been adjusted for.
Define gross domestic profit (GDP).
The value of output produced by domestic based resources within an economy over a given period of time.
Define inflation.
A sustained increase in the average general price level over a given period of time.
Define deflation.
A sustained decrease in the in general price level over a given period of time.
Define disinflation.
A fall in the increase rate of the general price level.
What are the two measures of inflation used in the UK?
- Retail Prices Index (RPI). It is based on a representative cross section of products purchased by a typical UK household
- Consumer Prices Index (CPI). This measure excludes costs related to home ownership.
What is the government’s target for CPI inflation?
2.0%.
Define unemployment.
The number of people of working age whom are seeking work but do not have a paid job.
Define economically active.
Those either looking for, or in work.
Define economically inactive.
Those of working age, capable of working, whom have chosen not to do, or look for paid work.
