2.1. Measures of Economic Performance DEFINITIONS

Economic Growth

The rate of change of output and an increase in the long-term productive potential of a country.

GDP (Gross Domestic Product)

The total value of goods and services produced in a country within a year.

Real GDP

GDP adjusted for inflation, reflecting the volume of national income.

Nominal GDP

The GDP that has not been adjusted for inflation, reflecting the monetary value of national income.

GDP per Capita

The total GDP divided by the number of people in a country, indicating the standard of living.

Gross National Income (GNI)

The value of goods and services produced by a country over time, including net overseas income.

Gross National Product (GNP)

The total value of goods and services produced by citizens, regardless of their location.

Purchasing Power Parity (PPP)

An exchange rate that compares the cost of a typical basket of goods in different countries.

Inflation

The general increase in prices in the economy, eroding purchasing power.

Deflation

The reduction of prices in the economy, indicating a slowdown in growth.

Disinflation

A decrease in the rate of inflation, where prices are still rising but at a slower pace.

Consumer Price Index (CPI)

An index measuring the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Retail Price Index (RPI)

An index that includes housing costs and is used to measure inflation.

Claimant Count

The number of people receiving unemployment benefits, used as a measure of unemployment.

Labour Force Survey (LFS)

A survey that measures employment and unemployment levels according to ILO definitions.

Frictional Unemployment

Short-term unemployment that occurs when people are transitioning between jobs.

Structural Unemployment

Long-term unemployment caused by industry changes that reduce the demand for certain skills.

Seasonal Unemployment

Unemployment resulting from seasonal variations in demand for certain types of labor.

Cyclical Unemployment

Unemployment resulting from a lack of demand in the economy, often during a recession.

Balance of Payments

A record of all financial transactions made between a country and the rest of the world.

Current Account

A component of the balance of payments that records all transactions related to goods, services, income, and current transfers.

Trade in Goods

The exchange of physical goods, classified as visibles in the balance of payments.

Trade in Services

The exchange of services, classified as invisibles in the balance of payments.

Income and Current Transfers

Financial transactions including wages, profits, and government transfers between countries.

Macroeconomic Objectives

Goals that governments aim for, including low unemployment, stable inflation, economic growth, and a balanced current account.