Topic 1 - The Measurement Of Macroeconomic Performance

Question 1

Availability Of Credit

Answer 1

Funds available for firms and households to borrow

Question 2

Base Year

Answer 2

The first year in an economic or financial index

Question 3

Black (informal, shadow) Market

Answer 3

Economic activities that occur below the governments radar

Question 4

Claimant Count

Answer 4

A method of measuring unemployment by counting all those who claim the jobseekers allowance and other unemployment related benefits

Question 5

Consumer Prices Index (CPI)

Answer 5

Official measure used to calculate the rate of consumer price inflation, using a basket of common goods

Question 6

Credit Crunch

Answer 6

Occurs when there is low availability of credit in the economy

Question 7

Economic Shock

Answer 7

Unexpected events and their effects on economies: can be demand side or supply side

Question 8

Exchange Rate

Answer 8

The price of currency measured in the terms of another currency

Question 9

Exports

Answer 9

Domestically produced goods and services sold to residents of other countries

Question 10

Full Employment

Answer 10

All those willing and able to work are able to find jobs

Question 11

Gross National Income (GNI)

Answer 11

Sum of value added by all producers who live in a nation, plus product taxes not included in the value of output, plus receipts of primary income from abroad

Question 12

Gross National Product (GNP)

Answer 12

Market value of all products produced per annum by the labour and property supplied by the citizens of one country

Question 13

Imports

Answer 13

Non domestically-produced goods and services sold to residents of this country

Question 14

Index Numbers

Answer 14

Numbers allowing accurate comparisons over time to be made. The base year value is typically 100

Question 15

Inflation Rate Target

Answer 15

The CPI inflation rate target set by the government, which Bank Of England aims to achieve, currently 2%

Question 16

Job-Seekers Allowance (JSA)

Answer 16

Unemployment related benefit

Question 17

Labour force survey

Answer 17

A quarterly survey of UK households, recording information on personal employment circumstances of the respondents

Question 18

Liquidity

Answer 18

The ease at which an asset can be turned into cash without loss or delay

Question 19

Macroeconomics

Answer 19

Involves studying the whole economy at an aggregate level

Question 20

Macroeconomic Stability

Answer 20

Occurs when there is a low volatility of key macroeconomic indicators

Question 21

Marginal Propensity To Consume (MPC)

Answer 21

The proportion of an increase in disposable income that is spent on consumer goods

Question 22

National Wealth

Answer 22

The stock of all goods with value in an economy

Question 23

Per Capita

Answer 23

Per Person/ Per Head

Question 24

Performance Indicator

Answer 24

Provides information used to judge the success or failure of a government policy

Question 25

Policy Instrument

Answer 25

Tool or set of tools used to to try and meet a policy objective

Question 26

Policy Objective

Answer 26

Target or goal policy-makers aim to hit

Question 27

Price Index

Answer 27

A number showing the extent to which a set of prices has changed in comparison to the prices in the base year.

Question 28

Purchasing Power Parity (PPP)

Answer 28

Adjustments of exchange rates to reflect the actual purchasing power of a currency

Question 29

Retail Prices Index (RPI)

Answer 29

An older measure used to calculate the rate of consumer price inflation

Question 30

Wealth

Answer 30

Stock of assets

Question 31

Weighting

Answer 31

When certain data items in a set are assigned a higher or lower importance than other data items in the set

Question 32

Short Term Economic Growth

Answer 32

Growth of real output resulting from using idle resources, including labour. thereby taking up the slack in the economy

Question 33

Long Term Economic Growth

Answer 33

An increase in the economy's potential level of real output and an outward shift of the economy's PPF

Question 34

Gross Domestic Product (GDP)

Answer 34

the sum of all goods and services, or level of output, produced in the economy over a period of time e.g 1 year

Question 35

Real GDP

Answer 35

A measure of all goods and services produced in an economy, adjusted for price changes or inflation. The adjustment transforms changes in nominal GDP

Question 36

Nominal GDP

Answer 36

GDP measured at the current rate market prices, without removing the effects of inflation

Question 37

Economic Growth

Answer 37

The increase in potential level of real output the economy can produce over a period

Question 38

Full Employment

Answer 38

When all who are willing and able to work are employed

Question 39

Unemployment

Answer 39

When not all those who are willing and able to work are employed

Question 40

Objectives Of Economic Policy (1)

Answer 40

L - Low inflation U - Low unemployment S - Sustainable growth T - Trade Balance

Question 41

Objectives Of Economic Policy (2)

Answer 41

T - Trade balance I - Low inflation G - Sustainable Growth E- High employment R - Redistribution of wealth / levelling up

Question 42

National Income

Answer 42

Measures the monetary value of the flow of output of goods and services. Produced in an economy over a period of time (usually one year)

Question 43

Uses Of National Income Data

Answer 43

Keep track off: Rate of economic growth Changes to living standards Changes to the distribution of income

Question 44

Nominal

Answer 44

Monetary values for data Not inflation adjusted Data expressed at current prices

Question 45

Real

Answer 45

Adjusted for inflation Prices held at level of chosen base year Data expressed at constant prices

Question 46

How to calculate value added

Answer 46

Value added = value of production - value of intermediate inputs

Question 47

What does SPICED stand for?

Answer 47

Strong Pound Imports Cheaper Exports Dearer

Question 48

What does WPIDEC stand for?

Answer 48

Weaker Pound Imports Dearer Exports Cheaper