Economic Performance Indicators
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Questions and Answers

What is the term for the long-term movement or pattern in economic data?

  • Inflation
  • Unemployment rate
  • Economic growth
  • Trend (correct)
  • What is the percentage increase in real gross domestic product over a period of time?

  • Economic growth (correct)
  • Unemployment rate
  • Inflation rate
  • Real wages
  • What is the state of being jobless and actively seeking work?

  • Inflation
  • Unemployment (correct)
  • Employment
  • Trend
  • What is the rate at which the general level of prices for goods and services is rising?

    <p>Inflation</p> Signup and view all the answers

    What is the term for wages adjusted for inflation, reflecting the purchasing power of income?

    <p>Real wages</p> Signup and view all the answers

    What is a measure of a country's gross domestic product that has been adjusted for inflation?

    <p>Real GDP</p> Signup and view all the answers

    What is the measurement of the prices of around 1000 commonly used goods and services?

    <p>Consumer Price Index</p> Signup and view all the answers

    How do households influence the CPI?

    <p>Households spend more, larger weight in the CPI</p> Signup and view all the answers

    What are the three main indicators of economic performance, as listed by the Reserve Bank of Australia?

    <p>GDP, inflation rate, and unemployment rate</p> Signup and view all the answers

    What does the inflation rate measure?

    <p>The rate at which the general price level of goods and services is rising</p> Signup and view all the answers

    What is the formula to calculate the growth rate of GDP?

    <p>(GDP2 - GDP1) / GDP1 x 100</p> Signup and view all the answers

    What does GDP per capita measure?

    <p>The average economic output per person</p> Signup and view all the answers

    What are some limitations of GDP as an economic indicator?

    <p>It does not account for household and volunteer work</p> Signup and view all the answers

    Why is the unemployment rate important to individuals?

    <p>It affects personal income and financial stability</p> Signup and view all the answers

    Why is the unemployment rate important to businesses?

    <p>It affects consumer spending and business revenues</p> Signup and view all the answers

    What is the significance of the three indicators of economic performance?

    <p>They provide a comprehensive picture of a country's economic performance</p> Signup and view all the answers

    Study Notes

    Indicators of Economic Performance

    Trend

    • A general direction in which something is devolving or changing over time
    • Often referred to as the long-term movement or pattern in data such as GDP growth or unemployment rates

    Economic Growth

    • Increase in the production of goods and services in an economy over a period of time
    • Measured as the percentage increase in real gross domestic product

    Unemployment

    • State of being jobless and actively seeking for work
    • Unemployment rate: (Unemployed ÷ Labour Force) x 100

    Inflation

    • Rate at which general level of prices for goods and services is rising
    • Measured by the consumer price index (CPI)

    Real Wages

    • Wages adjusted for inflation, reflecting the purchasing power of income
    • Indicates how much goods and services can be bought with earned wages

    Real GDP

    • Measure of a country's gross domestic product that has been adjusted for inflation
    • Takes inflation into account when comparing performance over time

    Consumer Price Index (CPI)

    • Measurement of prices of around 1000 commonly used goods and services
    • Shows overall changes in prices
    • CPI basket is chosen based on household spending habits

    Measuring Economic Performance

    • Three main indicators of economic performance:
      • Gross domestic product
      • Unemployment rate
      • Inflation rate

    Gross Domestic Product (GDP)

    • Measures the total value of all goods and services produced within a country's border in a specific time period
    • GDP calculation: (GDP 2 - GDP 1) / GDP 1 x 100 = Rate (%) of EG

    GDP Per Capita

    • Measures the average economic output per person
    • Calculated by dividing GDP by the total population
    • Provides a per-person basis for understanding the standard of living in a country

    Limitations of GDP as an Economic Indicator

    • Does not account for:
      • Caring for young or sick relatives, health, education
      • Volunteer work
      • Housework and maintaining a pleasant neighborhood
      • Leisure time, quality of life
      • Quality of the natural environment

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    Description

    Test your knowledge of key economic indicators, including trend, economic growth, and unemployment, and their importance in measuring economic performance.

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