Macroeconomic indicators

• What does GDP measure in an economy?

  GDP measures the quantity of goods and services produced in an economy.
• What does a rise in economic growth indicate?

  A rise in economic growth indicates an increase in national output.
• What is Real GDP?

  Real GDP is the value of GDP adjusted for inflation.
• If the economy grew by 4% and inflation was 2%, what was the real economic growth?

  The real economic growth was 2%.
• How is Real GDP per capita calculated?

  Real GDP per capita is calculated by dividing the value of real GDP by the population of the country.
• What does Real GDP per capita measure?

  Real GDP per capita measures the average output per person in an economy.
• Why is Real GDP per capita useful?

  It is useful for comparing the relative performance of countries.
• What do CPI and RPI measure in the UK?

  CPI and RPI measure inflation in the UK.
• What does the Consumer Prices Index (CPI) measure?

  The CPI measures household purchasing power with the Family Expenditure Survey.
• How is the basket of goods for CPI created?

  The basket of goods is created based on what consumers spend their income on, weighted by expenditure.
• Why does petrol have a higher weighting than tea in the CPI basket?

  Because more income is spent on petrol than on tea.
• How often is the CPI basket updated?

  The CPI basket is updated each year to account for changes in spending patterns.
• What is the difference between RPI and CPI?

  RPI includes housing costs, while CPI does not.
• What is the Claimant Count?


  The Claimant Count counts the number of people claiming unemployment-related benefits.
• What must individuals do to be counted in the Claimant Count?

  They must prove they are actively looking for work.
• What does the International Labour Organisation (ILO) do regarding unemployment measurement?


  The ILO conducts the UK Labour Force Survey (LFS).
• What criteria does the LFS use to measure unemployment?

  It asks if individuals have been out of work for 4 weeks, are able and willing to start working within 2 weeks, and are available for 1 hour per week.
• Why does the LFS give a higher unemployment figure than the Claimant Count?

  Because part-time unemployed individuals are less likely to claim unemployment benefits.
• How is productivity defined?


  Productivity is defined as output per worker per period of time.
• What does an increase in productivity indicate?

  It indicates that more output can be produced with fewer units of input.
• How is labour productivity measured in the UK?

  Labour productivity is measured by output per hour.
• What was the growth of labour productivity in the first quarter of 2015?

  Labour productivity grew by 0.3%.
• What is the balance of payments?

  The balance of payments is a record of all financial transactions made between a country and other countries.
• What does the balance of payments state?

  It states how much is spent on imports and the value of exports.
• What are exports in the balance of payments?

  Exports are goods and services sold to foreign countries.
• Why are exports considered positive in the balance of payments?

  Because they are an inflow of money.
• What are imports in the balance of payments?

  Imports are goods and services bought from foreign countries.
• Why are imports considered negative in the balance of payments?

  Because they are an outflow of money.
• What are the three main components of the balance of payments?

  • The current account
  • The capital account
  • The official financing account
• What does the current account on the balance of payments represent?

  The current account represents the balance of trade in goods and services.