Value measures of GDP

It's the total amount of goods and services produced in a country, in a year

Purchasing Power Parities (PPPs)

They are exchange rates that equalize the purchasing power of different currencies for a common basket of goods.

Comparing growth rates between countries helps assess relative economic performance.

Examining growth rates over time reveals economic patterns and trends.

Cross-Country Comparisons

Comparing growth rates between countries helps assess relative economic performance.

They are exchange rates that equalize the purchasing power of different currencies for a common basket of goods.

Examining growth rates over time reveals economic patterns and trends.

They are exchange rates that equalize the purchasing power of different currencies for a common basket of goods.

Comparing growth rates between countries helps assess relative economic performance.

Limitations of Using GDP to Compare Living Standards

Income Distribution: GDP per capita does not account for income inequality, and a high GDP may conceal disparities in living standards.

Non-Market Activities: GDP excludes non-market activities like household labor and informal economies, leading to an incomplete picture of living standards.

Quality of Life: GDP does not measure factors such as healthcare, education, environmental quality, and overall well-being.

UK National Wellbeing- where they take surveys which help to estimate overall satisfaction with life

Relationship Between Real Incomes and Subjective Happiness- where there's positive relationship, although once income increases past a point, marginal gain in happiness fall

UK National Wellbeing- where they take surveys which help to estimate overall satisfaction with life

Relationship Between Real Incomes and Subjective Happiness- where there's positive relationship, although once income increases past a point, marginal gain in happiness fall

Income Distribution: GDP per capita does not account for income inequality, and a high GDP may conceal disparities in living standards.

Non-Market Activities: GDP excludes non-market activities like household labor and informal economies, leading to an incomplete picture of living standards.

Quality of Life: GDP does not measure factors such as healthcare, education, environmental quality, and overall well-being.

It's a general increase in price level over a period of time

It's a reduction in general price level of an economy over a period of time

It's when a reduction in the rate of inflation

It's a reduction in general price level of an economy over a period of time

It's a general increase in price level over a period of time

It's when a reduction in the rate of inflation

It's a general increase in price level over a period of time

It's a reduction in general price level of an economy over a period of time

Ways to calculate: INFLATION

It's a measure of the increase in the average price level. This is a weighted average of items on which people spend their money

It's a measure of inflation used for inflation targeting in the UK, It does not include housing costs, such as rent. It's ansi used to make international comparisons of inflation rates.

Ways to calculate: CPI

It's a measure of inflation used for inflation targeting in the UK, It does not include housing costs, such as rent. It's ansi used to make international comparisons of inflation rates.

It's a measure of the increase in the average price level. This is a weighted average of items on which people spend their money

Key Features of the CPI:

ROI measured by changes in the CPI, which is used for inflation targeting

It's used for international comparisons

They are used to show the proportion of income spent on items.

ROI measured by changes in the CPI, which is used for inflation targeting

It's used for international comparisons

It does not include households prices

Some people don't have representative spending patterns, so might experience cost of living rises by more or less than the averages shown by the CPI

Attempts ate made to take account of changes in the quality or weights of foods but inevitably theses adjustment may be imprecise

CPI is changed once a year, so imprecise values

Less Purchasing Power so quality of living will eventually diminish.

RPI is another measure of inflation in the UK that includes a broader range of expenditures than CPI.

It is used for various purposes, including index-linked bonds and some pension calculations.

RPI tends to produce a higher inflation rate than CPI because it includes housing costs and uses a different formula.

Causes of inflation: Demand-Pull Inflation

It occurs when AD in the economy increases at a faster rate than AS

It occurs when AS decreases,. where the total cost of production increases.

An increase in the money supply, not matched by a corresponding increase in economic output, can lead to excess demand for goods and services and result in inflation.

Causes of inflation: Cost-Push Inflation

It occurs when AS decreases,. where the total cost of production increases.

It occurs when AD in the economy increases at a faster rate than AS

An increase in the money supply, not matched by a corresponding increase in economic output, can lead to excess demand for goods and services and result in inflation.

Causes of inflation: Growth of the Money Supply (Monetarism)

An increase in the money supply, not matched by a corresponding increase in economic output, can lead to excess demand for goods and services and result in inflation.

It occurs when AD in the economy increases at a faster rate than AS

It occurs when AS decreases,. where the total cost of production increases.

Effects on high rate inflation: Consumers

For those with fixed incomes would mean their income will fall in real time due to inflation

For those with savings would mean the real value of savings will decrease due to high inflation

For those with lines and mortgages, the real value will fall, benefitting the consumers

For those with business, inflation does no impact on them, causing value of savings to rise

Effects on high rate inflation: Firms

They may face rising production costs, reducing profit margins.

They may adjust prices upward to maintain profitability.

Fixed-income earners may experience reduced real incomes.

For those with business, inflation does no impact on them, causing value of savings to rise

Effects on high rate inflation: Government

Inflation can increase the cost of servicing government debt, diverting resources from other public spending priorities.

Tax brackets may not be adjusted for inflation, resulting in "bracket creep" and higher tax burdens.

While workers may see nominal wage increases, their real wages may decline due to inflation.

Labor unions may negotiate for higher wages to keep pace with rising prices.

Effects on high rate inflation: Workers

While workers may see nominal wage increases, their real wages may decline due to inflation.

Labor unions may negotiate for higher wages to keep pace with rising prices.

Inflation can increase the cost of servicing government debt, diverting resources from other public spending priorities.

Tax brackets may not be adjusted for inflation, resulting in "bracket creep" and higher tax burdens.

It's the number of people in work

Its the number of people in work as a percentage of the working age population

It's based on claimants of unemployment-related benefits, either from JSA or UC

This is a survey of a sample of households. It asks people aged between 16 and 65, whether they have been out of work over the last 4 weeks and if they are ready to start in 2 weeks.

Its the number of people in work as a percentage of the working age population

It's the number of people in work

It's based on claimants of unemployment-related benefits, either from JSA or UC

This is a survey of a sample of households. It asks people aged between 16 and 65, whether they have been out of work over the last 4 weeks and if they are ready to start in 2 weeks.

It's based on claimants of unemployment-related benefits, either from JSA or UC

It's the number of people in work

Its the number of people in work as a percentage of the working age population

This is a survey of a sample of households. It asks people aged between 16 and 65, whether they have been out of work over the last 4 weeks and if they are ready to start in 2 weeks.

It's the number of people in work

Its the number of people in work as a percentage of the working age population

It's based on claimants of unemployment-related benefits, either from JSA or UC

Unemployment rate (static concept)

It's the number of unemployed people as a percentage of the labour force

It includes individuals who are seeks or available for additional work

Underemployment rate (static concept)

It includes individuals who are seeks or available for additional work

It's the number of unemployed people as a percentage of the labour force

Sigs of Increase in the employment rate:

Higher government taxation revenues

Job market becomes less flexible

Sigs of Decrease in the unemployment rate:

Falling government expenditure on benefits

Increased employment as people who dropped out for a whole become increasingly unemployable

Job market becomes less flexible

Higher government taxation revenues

Increase in inactivity rate:

The productive capacity will fall

There may be more claims on state benefits

When here's more people in higher education, in the future there would be greater skills in the workplace