Key Performance Indicators

    0
    55

    Key Performance Indicators

    • Economic Growth
      • Short run – When an economy increases its output (real GDP)
        • This is unsustainable as the productive potential must increase too, for if it doesn’t, the economy will reach supply constraints (slope of AS curve)
      • Long run – an increase in the maximum output that the economy can produce
    • Unemployment
      • When a country’s output increases, unemployment usually falls
      • Unemployment is said to exit when people who are willing and able to work are without jobs
      • Not everyone is counted, e.g. a 14 year old or a pensioner would be economically inactive, and not a part of the labour force
    • Inflation
      • This is a sustained rise in the price level
    • Balance of Payments
      • This is a record of a country’s economic transactions with the rest of the world, e.g. what a country’s buying and selling, and who they’re trading with.
    • Income Distribution
    • Economic Stability
      • A government is likely to try and prevent severe fluctuations in indicators such as output, employment and inflation.
      • Such fluctuations create uncertainty, and make it difficult for households and firms to plan ahead.
      • In turn, this can discourage workers from increasing their skills and firms from investing
      • Therefore, reducing economic fluctuations should increase an economy’s long term growth potential.

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here