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National Economic Performance
Microeconomics and Macroeconomics
Microeconomics: The study of individual behaviours of markets in an economy.
Macroeconomics: They study of the economy as a whole.

National Economic Performance
Macroeconomics
o Tells us something about the performance of the economy
o Allows economists to compare the present with the past…

Page 2

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Cut down domestic spending -> Less demand for imports -> Higher unemployment rate and
reduced economic growth
If exports are greater than imports (earning > spending), the extra earning is called current account surplus.

Government Objectives
Government attempt to manipulate the economy so as to improve its economic performance
o…

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The Circular Flow of Income
Income, Output and Expenditure
National income: The value of the output, expenditure or income of an economy over a period of time.
o Open economy: An economy where there is trade with other countries.
o Closed economy: An economy where there is no foreign trade.…

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Net national income at market prices
o Gross national income - depreciation

Transfer Payments
Income for which there is no corresponding output (excluded from calculation of national income)
o E.g. government spending on welfare benefits but getting nothing in return

Why is National Income Measured?
Academic economists use them to…

Page 5

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o Proportion of national income devoted to defence must be taken into account when considering the
standard of living of the population
Consumption and investment
o It is possible to increase standards of living today by reducing investment and increasing consumption
o A fall in living standards in the future…

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Economic Growth
Introduction
Economic growth: Growth in the productive potential of the economy, typically measured by growth in real
GDP ­ a proxy measure as actual GP may be above/ below productive potential at a point of time

The Business Cycle
Regular fluctuations in the level of economic activity around…

Page 7

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Labour ­ Increasing or decreasing the number of workers
Changes in demography ­ The number of young people entering the workforce as compared to leaving it
Increases in participation rates ­ The number of women who would work if opportunities were present
Immigration ­ The number of migrant labour employed…

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Economic Growth and Welfare
National income and Economic Welfare (other measures of economic welfare)
Political freedom: Civil liberties VS totalitarian regimes which rule through fear
Social and cultural environment: Presence of arts and education which exist in their own right, those used as
political propaganda or with financial incentives (advertising…

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o Supporters of growth are relatively well off ­ Cutting their consumption or producing
environmentally friendly alternative technologies would not be difficult for them
o Leaves the mass of people in the Third World today at their present living standards would lead to
greater inequality

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The Economics of Happiness
New Perspectives in Economics
Data mining: Interrogation of data bases which are widely available or may be self-created by asking the
right questions, formulating hypotheses and drawing valid conclusions.
Combination of sociology or psychology with economic theory
o Prospect theory describes decisions between alternatives that involve…

Comments

Whitney Koranteng

This is brilliant thank you 

Anoult Anton

rachael be an angel n do unit 3 and 4 please ? these notes are actually amazing ! <3

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