MACROECONOMICS GLOSSARY
4.2.1.1
Nominal GDP : measuring the value of goods and services produced by using the current
year of prices.
Real GDP: measure the value of goods and services produced by using the base
year prices
Real GDP per capita - Total GDP in an economy divided by the number of people in the
economy – this is used as a measure of living standards.
Consumer price index (CPI) - This is one way to measure changes in average prices in an
economy. The CPI takes a ‘basket of goods’, weights the items in the basket according to
their importance in terms
Claimant count - This measure of unemployment simply works by counting the number of
people in receipt of unemployment benefit (Job Seekers Allowance, or certain types of
Universal Credit recipients)
Unemployment rate (U) – The labour force survey (LFS) carried out quarterly to measure the
number of people who is willing and able to work and actively seeking work but is not able to
find a job.
Productivity - is a measure of efficiency that evaluates the output produced relative to the
input used.
Balance of Payments - is a measure of all an economy’s international transactions. The
current account is 1 of 3 accounts on the Balance of Payments. The current account includes
the trade balance (i.e. the value of exports minus the value of imports) as well as net primary
income (i.e. net income earned from factors of production overseas) and net secondary
income (i.e. mostly international payments by governments)
index number- is a ratio comparing the actual value of a variable in a given year with the
actual value of the variable in a chosen base year and the ratio is multiplied by 100 ( not
100%)
Consumer Price Index - is currently the main measure of inflation used in the UK (although
there are numerous other measures)
Purchasing power parity treatment - means that if you want to compare the GDP figures of
two countries e.g. US and Indonesia, usually you would convert the Indonesia GDP into US
dollar.
Economic growth - Short run economic growth is a rise in real GDP over time. Contributes to
rising average living standards i.e. a higher per capita GDP/GNI. Long run economic growth
is an increase in a country’s productive potential / productive capacity
, Economic welfare - A broader measure of well-being (i.e. social + economic factors are
considered)o Many aspects of well-being are not directly linked to material aspects of life.
Welfare measure might include changing levels of inequality + median household incomes
Human Development Index (HDI): The HDI is a composite index that measures the average
achievements in three key dimensions of human development: health (measured by life
expectancy at birth), education (measured by expected years of schooling and mean years of
schooling), and standard of living (measured by Gross National Income per capita adjusted
for purchasing power parity). It provides a broader view of economic welfare beyond just
economic growth.
Genuine Progress Indicator (GPI): The GPI is an alternative metric to Gross Domestic
Product (GDP) that attempts to capture economic welfare more comprehensively. It takes
into account factors such as income distribution, environmental sustainability, household
production, and the value of unpaid work, providing a more nuanced assessment of economic
well-being.
Social Progress Index (SPI): The SPI measures the social and environmental performance of
countries based on multiple indicators across three broad dimensions: basic human needs,
foundations of well-being, and opportunity. It includes indicators such as access to education,
healthcare, nutrition, personal safety, environmental quality, and tolerance, providing a
holistic assessment of economic welfare.
Inequality-adjusted Human Development Index (IHDI): The IHDI is an index that adjusts the
HDI for income inequality within a country. It considers not only the average achievements
in health, education, and income but also the distribution of those achievements. By
incorporating inequality, it provides a more comprehensive measure of economic welfare that
accounts for disparities among the population.
Happy Planet Index (HPI): The HPI measures the well-being and ecological sustainability of
countries. It combines indicators of life satisfaction, life expectancy, and ecological footprint
to assess the efficiency with which countries are delivering long and happy lives for their
citizens within the ecological limits of the planet.
4.2.2.
macroeconomic equilibrium- when the rate of injections = the rate of withdrawals
trade surplus- When the value of exports > the value of imports, a country is running and this
is a net injection into the circular flow
trade deficit- When the value of exports < the value of imports, a country is running and this
is a net leakage from the circular flow
Nominal GDP- is the monetary value of the national output of goods and services measured
at current prices. We can also say that this is a ‘value’ measurement.
Real GDP- involves taking inflation into account – where money GDP is adjusted for
changes in the price level - we say that GDP is measured in constant prices. We can also say
that this is a volume measurement.
4.2.1.1
Nominal GDP : measuring the value of goods and services produced by using the current
year of prices.
Real GDP: measure the value of goods and services produced by using the base
year prices
Real GDP per capita - Total GDP in an economy divided by the number of people in the
economy – this is used as a measure of living standards.
Consumer price index (CPI) - This is one way to measure changes in average prices in an
economy. The CPI takes a ‘basket of goods’, weights the items in the basket according to
their importance in terms
Claimant count - This measure of unemployment simply works by counting the number of
people in receipt of unemployment benefit (Job Seekers Allowance, or certain types of
Universal Credit recipients)
Unemployment rate (U) – The labour force survey (LFS) carried out quarterly to measure the
number of people who is willing and able to work and actively seeking work but is not able to
find a job.
Productivity - is a measure of efficiency that evaluates the output produced relative to the
input used.
Balance of Payments - is a measure of all an economy’s international transactions. The
current account is 1 of 3 accounts on the Balance of Payments. The current account includes
the trade balance (i.e. the value of exports minus the value of imports) as well as net primary
income (i.e. net income earned from factors of production overseas) and net secondary
income (i.e. mostly international payments by governments)
index number- is a ratio comparing the actual value of a variable in a given year with the
actual value of the variable in a chosen base year and the ratio is multiplied by 100 ( not
100%)
Consumer Price Index - is currently the main measure of inflation used in the UK (although
there are numerous other measures)
Purchasing power parity treatment - means that if you want to compare the GDP figures of
two countries e.g. US and Indonesia, usually you would convert the Indonesia GDP into US
dollar.
Economic growth - Short run economic growth is a rise in real GDP over time. Contributes to
rising average living standards i.e. a higher per capita GDP/GNI. Long run economic growth
is an increase in a country’s productive potential / productive capacity
, Economic welfare - A broader measure of well-being (i.e. social + economic factors are
considered)o Many aspects of well-being are not directly linked to material aspects of life.
Welfare measure might include changing levels of inequality + median household incomes
Human Development Index (HDI): The HDI is a composite index that measures the average
achievements in three key dimensions of human development: health (measured by life
expectancy at birth), education (measured by expected years of schooling and mean years of
schooling), and standard of living (measured by Gross National Income per capita adjusted
for purchasing power parity). It provides a broader view of economic welfare beyond just
economic growth.
Genuine Progress Indicator (GPI): The GPI is an alternative metric to Gross Domestic
Product (GDP) that attempts to capture economic welfare more comprehensively. It takes
into account factors such as income distribution, environmental sustainability, household
production, and the value of unpaid work, providing a more nuanced assessment of economic
well-being.
Social Progress Index (SPI): The SPI measures the social and environmental performance of
countries based on multiple indicators across three broad dimensions: basic human needs,
foundations of well-being, and opportunity. It includes indicators such as access to education,
healthcare, nutrition, personal safety, environmental quality, and tolerance, providing a
holistic assessment of economic welfare.
Inequality-adjusted Human Development Index (IHDI): The IHDI is an index that adjusts the
HDI for income inequality within a country. It considers not only the average achievements
in health, education, and income but also the distribution of those achievements. By
incorporating inequality, it provides a more comprehensive measure of economic welfare that
accounts for disparities among the population.
Happy Planet Index (HPI): The HPI measures the well-being and ecological sustainability of
countries. It combines indicators of life satisfaction, life expectancy, and ecological footprint
to assess the efficiency with which countries are delivering long and happy lives for their
citizens within the ecological limits of the planet.
4.2.2.
macroeconomic equilibrium- when the rate of injections = the rate of withdrawals
trade surplus- When the value of exports > the value of imports, a country is running and this
is a net injection into the circular flow
trade deficit- When the value of exports < the value of imports, a country is running and this
is a net leakage from the circular flow
Nominal GDP- is the monetary value of the national output of goods and services measured
at current prices. We can also say that this is a ‘value’ measurement.
Real GDP- involves taking inflation into account – where money GDP is adjusted for
changes in the price level - we say that GDP is measured in constant prices. We can also say
that this is a volume measurement.
