2.1 - measures of economic growth - DEFINITIONS

A-level economics edexcel theme 2.1

Inflation =

a sustained general rise in price across the economy

Deflation =

a sustained fall in price across an economy (negative inflation rate)

Disfinflation =

A fall in annual rate of price inflation, prices are still rising but at a slower rate

GDP =

The total value of all goods and services produced in an economy over a period of time

Real GDP =

considers inflation

Nominal GDP =

without considering inflation

Real GDP equation =

Nominal GDP/inflation index x100

GNP =

GDP + net overseas income - income earned from foreigners domestically

GNI =

GDP + foreign net income

Claimant count =

the number of people claiming the Job Seekers Allowance (JSA)

UK labour force survey =

a monthly survey sent to 40,000 households to find out their economic status’

Unemployment rate =

the proportion of economically active population who are unemployed

Underemployment =

someone who is employed but could/wants to work more hours or isn’t utilizing their full skill set

Balance of payments =

A set of accounts which record financial transactions between the residents of the UK and its global trading partners

3 BoP accounts

Current, capital and financial

Current account is made up of

Visibles, invisibles, income balance, current transfers

Visibles =

trade in goods balance = value of goods exported - value of goods imported

Invisibles =

trade in services balance = value of services exported - value of services imported

Investment income =

earnings of foreign investments (interest, profits and dividends)

Current transfers =

foreign aid, remittances paid out of the country

If X>M there is a current account _____

surplus

if X<M there is a current account _____

deficit