Yr1 The Measurement of Macroeconomic Performance

Question 1

PART 1

Answer 1

THE OBJECTIVES OF GOVERNMENT ECONOMIC POLICY

Question 2

What are some objectives of the UK government? (6)

Answer 2

1. Price stability (CPI inflation 2%)
2. Growth in real GDP (real output)
3. Falling unemployment
4. Higher average living standards (national income per capita)
5. Stable balance of payments on the current account EXPORTS
6. An equitable Distribution of Income and Wealth

Question 3

Definition of balance of payments

Answer 3

A record of all of the currency flows into and out of a country in a particular time period

Question 4

PART 2

Answer 4

MACROECONOMIC INDICATORS

Question 5

What are the 4 main measures of economic ability?

Answer 5

1. GDP per capita
2. Inflation
3. Unemployment
4. Gini coefficient

Question 6

PART 3

Answer 6

USES OF INDEX NUMBERS

Question 7

What is the definition of a normal number (current)?

Answer 7

Values that have not been adjusted to take into account of inflation

Question 8

What is the definition of a real number? (Constant)

Answer 8

Values that have been adjusted to take account of inflation > reflects purchasing power of the currency

Question 9

What is the definition of index numbers?

Answer 9

A figure reflecting piece of quantity compared with a base value. The base value always has an index number of 100

Question 10

What is the formula to calculate the base number?

Answer 10

(Year value / base year value) x 100

Question 11

What is the formula to calculate the % change in index numbers?

Answer 11

(New index number - orig index number) / orig index number x 100

Question 12

How do you calculate the actual number from the index number?

Answer 12

Figure in base time period x (index number x 100)

Question 13

What is the formula to find the real value of an index number?

Answer 13

(Nominal value / new price index) x100