Measures of economic performance

increase in real gross domestic product

the total amount of goods and services produced in a country in one year

adjusted for inflation

increase in the productive potential of an economy

when an economy has two consecutive quarters of negative economic growth

total GDP divided by the population

amount of goods produced

amount of goods produced multiplied by the price at which they are sold

income received by a country both domestically (GDP) and via net incomes from overseas

GDP + profits from companies operating abroad and income earned from nationals living in foreign countries - profits from foreign-owned companies and income earned from foreign nationals living in the country that goes abroad

used to compare GDP in different countries and takes into account the cost of a ‘basket of goods’ that could be bought in each of the countries being compared

the rate that equalises the purchasing power of different currencies by eliminating differences in prices between countries

a measure of living standards that takes into account housing, health, environment and safety

population, rates of inflation, income distribution, exhange rates, amount of self-consumed output, type of government spending

population, rates of inflation, income distribution, amount of self-consumed output, type of government spending

measure of how people feel about themselves

positive relationship up to a certain level of income, once income increases beyonf that level, marginal gains in happiness fall (Easterlin paradox)

governments need to focus not only on economic growth but also on other objectives such as income equality and a clean environment

sustained rise in the general price level

sustained fall in the general price level

fall in the rate of inflation

consumper price index (CPI), CPIH, retail price index (RPI)

weighted average of items on which people spend their money

CPI

nominal GDP / CPI

number shown relative to another number in percentage terms

used to compare price levels in different time periods

proprtion of income spent on items

living costs and food survey collects information about purchases from 7000 households in the UK, data about the change in the prices of the 700 most commonly used goods and sercives is collected, weights are assigned to each item the average household buys, price changes are multiplied by weights to give a price index

housing costs such as rent payments, mortgage interest repayments and council tax

does not inlude housing costs, unrepresentative spending patterns, does not account for changes in quality, sudden changes in spending patterns are not reflected, survey sampling issues

CPI + housing costs

CPIH

demand-pull inflation, cost-push inflation, growth of money supply

aggregate demand in the economy increases at a faster rate than aggregate supply

aggregate supply decreases as the cost of production increases

decrease in interest rates, rise in the level of business and consumer confidence, increase in government spending, exports rise relative to imports, depreciation of the exchange rate

rise in raw material prices, depreciation of the exchagne rate, rise in taxes on businesses, increase in minimum wage, increased regulations

income falls in real terms, real value of savings deceases, real value of loans fall

decrease in international competitiveness resulting in the worsening of the trade balance, uncertainty leading to a fall in investment, lower profits leading to afall in investment

fall in the real value of national debt, increased inequality, deteriration in the balance of trade

incomes of workers in a weak bargaining position may fall, unemployment

level of employment, rate of employment

number of people in work

number of people in work as a percentage of the working age population

claimant count, ILO (labour force survey)

number of people caliming unemployment benefits, either from Jobseeker’s Allowance (JSA) or Universal Credit (UC)

people who are willing and able to work but are not currently in employment

reliable as it is based on real data, provide data about the potentail cost of unemployment to tax payers, available monthly

many people can’t claim it as they have savings or a partner in work, people claim dishonestly, not internationally comparable

statistically robust, internationally comparable, independent of benefits system

costly to administer, only available quarterly, respondents may not asnwer honestly

the number of unemployed people as a percentage of the labour force

people aged 16 and over who are either employed or unemployed

people over the age of 16 who are not working, but who are available to work, and have either looked for job during last four weeks or are waiting to start a job in the next two weeks

people who have worked at least one hour paid work in the last four weeks or who are on government subsidized work experience or occupational training

people who are employed but for fewer hours than they would like

poeple not in education, employment or training and who are not actively seeking work withint the last 4 weeks and are unavailable for work within the next 2 weeks

increased GDP, increased revenues and profits for firms, increased incomes leading to a higher standard of living, improved skills (human capital) of workers, higher government taxation revenue

the knowledge and skills of a workforce that determine its productivity

falling government spending on JSA and UC, increased employment

productive capacity of the country will fall, more claims on state benefits, dependency ration will increase (number of inactive people who are directly or indirectly supported by employed or active people)

cyclical and demand deficient, structural, frictional, seasonal, real wage inflexibility (classical)

caused by a fall in AD due to recession

caused by a mismatch between the jobs available and the skills of workers

caused by people leaving a job and not yet starting another

caused by a change in seasons

caused by wages being above the equilibrium

the movement of people from one country to another

employment, to earn a higher income, better standard of living, to study abroad, to join other family members, to escape conflic or discrimination, to avoid high tax liabilities, remittances

increased productivity leading to an increase in economic growth, higher earnings, more stable and secure emplyments, lower income inequality and poverty

deacrease in living standards, loss of confidence leading to lower consumer spending, mental illness, lower house prices and fall in personal wealth

easier to recruit new employees, less consumer spending so fall in sales and profits, lower costs of production due to low wages

loss of skills, loss of income, lower living standards, long-term unemployment means it is more difficult to get a job in the future

increasing spending on government debts, less revenue from income and indirect taxes, opportunity cost (the goods and services that could have been produced by the unemployed workers), rise in inequality, crime and polutical unrest

record of international payments over the course of a year

balance of trade + primary balance + secondary balance

value of goods and service exported - value of goods and services imported

earning on foreign investments (interest, profits and dividends) - payments made to foreigners

transfers in the form of money or goods and services (taxes, social security contributions, foreign aid)

strong currency relative to other countries, high rate of inflation relative to other countries, high wage costs relative to other countires, high rate of economic growth (people have more income to spend on imports from abroad)

weak currency realtive to other countries, low rate of inflation relative to other countries, low wage costs relative to other countires, low rate of economic growth (people have less income to spend on imports from abroad)

a worldwide network of companies and their suppliers, manufacturers, warehouses, distribution centres and retailers