Slides in this set
Government targets for the economy
Economic Growth: The percentage
increase in Real GDP over one year
Low Unemployment: Unemployment rate
is defined as the % of the working
population who are without a job but who
are actively seeking/willing to work.
Low and stable Inflation: Inflation is the %
increase in general price levels in one year
Balance of Payments Surplus: A record of
the flow of money between the UK and the
rest of the world. (The surplus is more
exports than imports)…read more
The percentage increase in real GDP in
Real GDP= Gross Domestic Product. The
Value of all final output produced in an
economy in a year, with the effects of
inflation stripped out.
GDP per capita: Population/Real GDP
gives an indication as to the standard of
living in an economy…read more
Why is it difficult to gain an accurate
measurement of GDP?
Unrecorded Economic Activity: This is
where there are no records of the output
because they are undeclared. This is
particularly present for example with cash
in hand jobs.
Non-Marketed Output: Output is again
not recorded, but this time because no
money has been exchanged. E.g. DIY and
Public Services: It is extremely difficult to
put a market price on services such as the
Externalities: Value of the output does not…read more
Economic Growth (2)
The UK government aims for sustained
(long term) economic growth.
Increases in AD generally mean a short
term increase, and they are easy to achieve.
However: policy conflicts, the amount of
spare capacity in the economy and
unpredictability (time lag) can make this
economic growth undesirable.
Increases in AS mean a long term increase.
There are no policy conflicts in this case,
but Supply Side Policies take a long time to