Measures Of Economic Performance

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  • Created by: violasoph
  • Created on: 19-04-16 14:45
Why is economic growth not the same as GDP?
GDP is the measure of economic growth and an increase in real GDP is what defines economic growth
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What is the difference between constant prices GDP and current GDP?
Real values have the effects of inflation removed
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What is the difference between GNP and GNI?
There is no difference...they are different measures of the same thing.
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For a country like Greece (heavy borrower,) which economic measure would be more useful?
GNI/GNP would be more useful than GDP as it would give a more accurate measure of the living standards of the people.
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What would explain one country having the highest GNH but lowest GDP?
If everyone in the county is equally poor, than there is no anxiety about being less well of then people around them, so they tend to be happier.
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Why do developing countries tend to have higher economic growth rates than developed countries?
Developing countries can grow more quickly as they are starting with a lower base, so an input of $100m into one country will have a much larger effect than in another.
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Why is an index used to measure inflation?
To make comparisons over time over time and between different countries.
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Why are there two surveys for the CPI?
The expenditure survey shows us the proportion of income spent on each item so it can be weighted. The price survey tells us the change in prices for each good and service.
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Is it true to say that measures such as the CPI are described as "excluding mortgages"
No as they exclude the cost of mortgage interest repayments and since the cost of a mortgage doesn't change with inflation it is not included.
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Why does the government like to exclude housing costs in the main measure of inflation?
They include mortgage interest rates which change with inflation so raising the interest rate would cause inflation to appear to be going up in the short term if housing is included.
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How is inflation measured?
Using a weighted basket of goods decided by household surveys and a price survey. These are then used to set an index base year in which other years and countries can be compared to.
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What causes inflation?
In terms of the 'real economy' there are demand pressures and cost pressures. There is also monetary effect of having too much money in the economy chasing for too few goods.
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What is the ideal rate of inflation for an economy?
The UK is aiming for 2%, most countries have similar targets with the aim for inflation to be positive but not too high.
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What is the difference between the employment rate and the employment level?
The employment level is the total number employed, whereas the employment rate is the total number of people employed relative to the number of people of working age.
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Is the claimant count the measure of those eligible to receive JSA or the number receiving it?
The number of people receiving JSA.
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What causes the ILO to differ from the claimant count?
ILO has a wider range of ages and includes many people who are not eligible to claim JSA.
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Why does an increase in immigration tend to lead to an increase in employment and unemployment?
New immigrants fill jobs that people in the UK do not but they may bring people with them who struggle to get jobs or even displace Uk people from their current jobs.
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If you add together the employed and unemployed it adds to 80% of the population, why?
The other 20% are economically inactive.
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Are your holidays abroad an import?
Yes, the money is leaving the country and going to the country that you travel to.
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"America sneezes and the UK catches a cold" Explain this
If the USA suffers a recession, the effects will be felt more deeply in the UK as 17% of our exports go to them.
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Other cards in this set

Card 2

Front

What is the difference between constant prices GDP and current GDP?

Back

Real values have the effects of inflation removed

Card 3

Front

What is the difference between GNP and GNI?

Back

Preview of the front of card 3

Card 4

Front

For a country like Greece (heavy borrower,) which economic measure would be more useful?

Back

Preview of the front of card 4

Card 5

Front

What would explain one country having the highest GNH but lowest GDP?

Back

Preview of the front of card 5
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