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Measures of Economic Performance - Coggle Diagram
Measures of Economic Performance
Government Objectives
Price Stability -
The UK inflation target is 2%, measured by the CPI
Balance of Payments -
The government aims to keep a low deficit
Unemployment -
The government aims for as low unemployment as possible but accounting for frictional, the target is 3%
Economic Growth -
The governments aim to have a trend growth of 2.5%
Budget -
The government aims to keep a steady rate of borrowing so not to rapidly increase national debt
Income Equality -
Maintaining the gap between the rich and poor represents a fairer society
Conflicts of Government Objectives
Economic Growth vs Inflation
A growing economy is likely to experience inflationary pressures
Economic Growth vs Current Account
In periods of economic growth, consumers are more likely to spend and therefore imports increase
Economic Growth vs Budget Deficit
Reducing the budget deficit means less spending which means less economic activity and AD
Economic Growth vs Environment
Large levels of AD, likely results in negative externalities such as pollution
Unemployment vs Inflation
When more jobs are created, this means more wages and therefore higher cost-push inflation (Phillips curve)
Macroeconomic Indicators
Real GDP -
The level of GDP adjusted with inflation
Real GDP per Capita -
Real GDP per person in the economy
CPI / RPI
These measure the inflation, CPI being a basket of goods from household incomes, RPI includes housing costs such as mortgage interest
Claimant Count -
Measures the number of people claiming the jobs seekers allowance
Labour Force Survey -
Measures unemployment by seeing if people meet a specific criteria
Productivity -
Output per worker per period of time
Nominal GDP -
The value of GDP before adjusted by inflation
Gross National Product -
GDP plus income earned on overseas assets minus income earned by overseas residents