2.1 Macroeconomic Indicators
Macro comes from the Greek “Makro” which means large. Macroeconomics looks at an economy as a whole.
What macroeconomic indicators are frequently reported on the news?
ECON2:
The National Economy
This topic could be used at the end to revise key concepts.
2.1 What you need to know
The data that is commonly used to measure
the performance of the UK economy
How to use index numbers in order to make
comparisons between different economies
2.1 You should be able to:
Understand and explain different data that is
used to measure the UK economy
Use index numbers to compare different
economies in terms of GDP, GDP per capita,
Consumer Price and Retail Price Indices, unemployment and the balance of payments on current account
Key Measures of the UK Economy
The following 4 variables are used to measure national economic performance:
1. Economic Growth
Measured by Gross Domestic Product (GDP) or GDP per
capita
2. Unemployment
Usually measured as ‘level’ or ‘rate’
3. Inflation
Measured by the Consumer Price Index (CPI) and the
Retail Price Index (RPI)
4. Balance of Payments
Typically measured in terms of the value of the net exports Index Numbers
Economists frequently use index numbers when
making comparisons over time
An index starts in a given year, the base year, at an index number of 100
In subsequent years, percentage increases may push the index number above 100, and percentage decreases push the figure below 100
An index number of 102 means a 2% rise from the base year, and an index number of 98 means a 2% fall from the base year
Index numbers
Index numbers help to understand the
significance of a change
Easier to interpret than large numbers
Percentage change = Change/original x 100
Complete the table below
Year
Population of country x
1 (base year)
1 147 569
2
1 846 227
3
2 213 904
Index Number
100
GDP
Comment on the UK’s economic performance
What factors may have influenced the fluctuations in
performance?
If 2010 is the base year, what is the index number for 2012?
Would this data be easier to interpret if presented as index numbers? GDP Index
