HOW CAN WE MEASURE ECONOMIC PERFORMANCE
Economic
Measures:
·
Balance of Payments –
o
Measures economic transactions
between a countries residents and the rest of the world
o
Exports minus imports
o
It includes a Current Account:
§
The trade in goods
§
The trade in services
§
Income flows
§
Current transfers
o
It includes a Capital Account:
§
Sale and purchase of capital
assets and non-produced or non-financial assets
o
It includes a Financial Account:
§
Trade in financial assets
·
Inflation –
o
A persistent rise in prices in
an economy over a period of time
o
Causes
include demand pull when aggregate demand faster rise than aggregate supply or
cost push when increase in costs cause leftward shift in aggregate demand
o
Inflation does not fall – it
slows down or speeds up! (If inflation in 2003 was 3% and in 2004 is 2% it
still means prices have risen by an average of 2% over the last year!)
o
A fall in the price level is
termed ‘deflation’
·
Growth (GDP) –
o
The value of output of goods
and services produced in the UK during one year.
o
GDP per capita – GDP divided by
the population (GDP per head)
·
Unemployment –
o
The number of people of working
age who are without a job
o
The Claimant Count – those
actively seeking work and claiming benefit
o
ILO (International Labour
Organisation) measure– the number of people available for work and actively
seeking employment
·
Exchange Rate –
o
The price of one currency in
terms of another – the amount of one currency that has to be given up to
purchase another currency
o
Determined by the demand and
supply of a currency on foreign exchange markets
o
Demand determined by the
purchase of exports, supply by the purchase of imports
o
There can be fixed, floating or
managed (manipulated) exchange rates
Non-Economic
Measures:
·
Quality of Life –
o
Infrastructure – roads, communication networks,
bridges, railways, airports, ports
o
Water/Sewerage
o
Housing – affordable and accessible housing to
meet the needs of those in search of homes and employment
o
Health
o
Education
·
Environment –
o
Pollution – land, air, sea and noise
o
Waste – waste disposal and waste management
o
Nature – areas of outstanding beauty, national
parks, wildlife, ecology, sites
of special scientific interest
of special scientific interest
o
Land Use – planning regulations, building
regulations
·
Health –
o
Primary and secondary care, health education,
disease and accident prevention, number of doctors per head, access to health
care
o
Improve standard of healthcare
to improve growth rate (increase life expectancy, INDIA: so appropriate health
facilities for future ageing populationà will
be able to work for longer (years) therefore more money in the economy. )
·
Education –
o
The percentage of children in
an area or country with access to good education
o
Schools, colleges and
universities
o
The higher the percentage, the more
developed the country
o
Uk has higher percentage of
children being educated than China and India.
·
Unemployment-
o
If unemployment is high, the country is in a recession
o
Less money in the economy
