JO

Macroeconomic indicators

Here's a summary of the content in the image, organized for clarity:

Basic Macroeconomic Indicators: Notes

1. GDP (Gross Domestic Product)

  • Definition: Measures total output and national income in an economy.

  • Objective: Achieve high GDP while avoiding risks such as environmental damage or inflation.

  • Unit:

    • Measured in USD for international comparisons or domestic currency (e.g., GBP).

    • Growth is tracked by the percentage change in GDP (quarterly or annually).

    • Per capita GDP is used to measure living standards.

2. Unemployment

  • Definition:

    • Refers to people who are not working, but are willing and able to work, and are actively seeking jobs.

    • Measured via:

      • Claimant count: Number of people claiming unemployment benefits (e.g., Universal Credit).

      • Labour Force Survey: National survey providing headline statistics.

  • Objective: Keep unemployment as low as possible, while managing associated risks.

  • Unit:

    • Unemployment rate (%):

      • Formula: (Number of unemployed ÷ Labour force) × 100

      • Labour force includes employed + unemployed individuals (economically active).

    • Labour force participation (%):

      • Formula: (Labour force ÷ Working-age population) × 100

3. Inflation

  • Definition:

    • Sustained increase in the average price level of an economy.

    • Includes:

      • Deflation: A decrease in the price level.

      • Disinflation: Slower rate of inflation (e.g., drop from 3% to 2%).

      • Rate of Inflation: Annual percentage change in prices.

      • Real Inflation: Adjusted for inflation.

  • Objective: Maintain inflation at 2% (+/- 1% margin of error).

  • Unit:

    • CPI: Consumer Price Index.

    • CPIH: CPI + housing costs.

4. Balance of Payments on the Current Account

  • Definition: Tracks flows of money into and out of a country, including:

    • Trade in Goods

    • Trade in Services

    • Primary Income: Payments from factors of production.

    • Secondary Income: Transfers like foreign aid.

    • Balance of Trade: Exports - Imports.

  • Objective: Achieve a balanced current account over the long term.

  • Unit: Measured as a percentage of GDP, relative to the size of the economy.

Let me know if you'd like further clarifications or adjustments!