Topic 1 - Economic growth Flashcards
Macroeconomics
The study of interrelationships between economic variables at an aggregate level
Main 4 macroeconomic indicators:
Economics growth
Inflation
Unemployment
Balance of payments
What are the main sources of data
ONS
IMF
World Bank
United Nations
Nominal value
The value of an economic variable based on current prices taking no account of changing prices through time, the distorting effects of inflation are not removed.
Real value
The value of an economic variable taking account of changing prices through time, the distorting effects of inflation are removed
What is the equation for a price index
Nominal GDP
——————- X 100
Real GDP
How to calculate real GDP
Nominal GDP X P/I base year
——————
P/I current year
Calculation for index number
Current value
——————- X 100
Base value
What is an index number
An index number is a device for comparing the value of a variable in one period or location with a base observation
Potential economic growth
An expansion in the productive capacity of the economy
GDP
A measure of the economic activity carried out in the domestic economy over a period of time and is the value of all the goods and services produced by factors of production in a country in a year.
GNI
The value of all goods and services produced by a country’s owned factors of production wherever they are located
Actual economic growth
The rate of growth of real GDP in a period
GNI per capita
The average level of GNI per head of the population
Purchasing Power Parity Rate (PPP)
Would allow a traveller between the countries in question to convert between the relevant currencies and be able to purchase the same quantity of goods and services regardless of which country he was in
