AQA Economics Paper 2 - The national economy in a global context
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Course
The national and international economy
Institution
The National And International Economy
1. Economic growth Economic growth measures how much the value of output produced in an economy (known as national income) has grown over a period of time, usually over one year. It is calculated as the percentage change in national income over a period of time. 2. Price stability This is ...
1 economic growth economic growth measures how much the value of output produced in an economy known as national income has grown over a period of time
usually over one year it is calculated as
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The national and international economy
The national and international economy
The national and international economy
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AQA Economics Paper 2 - The national economy in a global
context
1. Economic
Economic growth measures how much the value
growth
of output produced in an economy (known as
national income) has grown over a period of time,
usually
over one year. It is calculated as the percentage
change in national income over a period of time.
2. Price stability This is concerned with how fast the average level
of prices of a range of goods and services rises
over a period of one year.
3. Balance of The balance of payments measures the
pay- ments difference be- tween the value of goods and
services sold abroad and the value of goods and
services bought from
abroad.
4. Balancing the
budget The government would like the value of
government ex- penditure and the value of
taxation to be the same as each other so that the
government's budget is
5. Achieving an balanced.
eq- uitable
distribu- tion of Incomes are not shared out equally across
income households in the economy. Achieving an
equitable distribution of income means the
government would like to
ensure that the gap between the richest and
poorest does not become excessively wide.
6. Policy conflict A policy conflict that has occurred frequently
concerns the conflict between minimising
unemployment and achieving price stability.
Success in reducing
the level of unemployment has often come at the
expense of prices rising at a faster rate, and vice
versa.
The conflicts that exist are often said to exist only
in the short term. It is suggested that in the long
1/
, AQA Economics Paper 2 - The national economy in a global
context
term, it is possible to achieve all the objectives at
the same time, with no policy conflict. Some
would argue that there is no conflict even in the
short term. This is open to debate.
7. The following are generally seen as the main
priorities among the government's economic
objectives:
2/
, AQA Economics Paper 2 - The national economy in a global
context
Importance of •economic growth
economic objec- •price stability
tives •minimising unemployment
Governments do not view all their economic
objectives as equally important. They have
priorities for their objectives and these priorities
change as
circumstances change. For example, after
winning the 2015 general election, George
Osborne, the Chancellor of the Exchequer at that
time, decided to make eliminating the budget
deficit less of a priority than it had been in the
8. Real gross do- previous parliament.
mestic
product (GDP) Gross domestic product (GDP) is a measure of the
nation- al income of an economy. It is based on
the value of all incomes earned in an economy
over a
period of time (data are produced every quarter,
though the yearly figure is the one that attracts
most attention).
9. Real GDP Real GDP measures the value of GDP after
removing the effect of price changes from its
value. This ensures that an increase in GDP from
one year to the next represents increased output
of goods and services rather than just increases
in prices.
10.Real GDP per index (CPI) and retail price index (RPI)
capita
11.Consumer price
3/
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