Economics Revision

Chapter 9: Macroeconomic Performance

Real GDP growth

A measure of the total output expenditure or income of an economy after adjusting for changes in the price level. The growth of real GDP is the % change in output during a particular time period, often measured over a year


The sustained increase in the general level of prices, measured in the UK by changes in the cost of a basket of goods & services bought by a typical household (consumer price index or CPI) weighted according to the expenditure on each item in the basket


Age arises when someone is out of work and actively seeking employment. Measured as the total number of people unemployed or as a % of the workforce

Balance of payments

Records money flows into and out of a country over a period of time

Current Account

Includes money glows due to trade (the trade balance - broken down to trade in goods and services) transfers of interest, profit and dividends (the investment income balance) and transfers of money by Gov. and international organisations (the transfers balance)

Standard of Living

A measure of the material well-being of a nations and its people

Short-run economic growth

The actual annual % increase in an economy's output, sometimes referred to as actual economic growth

Long-run economic growth

The rate at which the economy's potential output could grow as a result of changes in the economy's capacity to produce goods and services, sometimes referred to as potential economic growth

Output Gap

The difference between the actual and potential output of an economy. It is common practice to refer to a situation where actual output is below potential output as a negative output gap. A positive output gap occurs when, in the short term actual output exceeds the...