Measures of Economic Performance | Edexcel A-Level Economics A (9EC0)

Measures of Economic Performance

188 questions
12 subtopics
Theme 2: the UK economy, performance and policies
Paper 2 and Paper 3

Covers the four numbers by which an economy is judged: growth, inflation, unemployment and the current account, how each is measured, what the measures miss, and what causes and follows from each..

It covers measuring growth: real GDP, GDP per capita and GNI, purchasing power parity and the limitations of GDP, national wellbeing and the Easterlin paradox, inflation, deflation and how the CPI measures them, the limitations of the CPI, and the RPI, demand-pull, cost-push and monetary causes of inflation, the effects of inflation, measuring employment, unemployment and inactivity, the causes of unemployment, migration and skills, the effects of unemployment, the components of the current account and current account deficits, surpluses and global imbalances.

Sample questions from Measures of Economic Performance

Answer each one closed book first, then open the answer.

Measuring growth: real GDP, GDP per capita and GNI

Calculate the GDP per capita when total GDP = 2200 billion, population = 70 million.

Show the answer
GDP per capita = 2,200,000,000,000 ÷ 70,000,000 ≈ 31,429 currency units per person (about 31.4 thousand per person).
Purchasing power parity and the limitations of GDP

What type of externality does GDP fail to account for, and why is this a limitation?

Show the answer
GDP does not account for negative externalities such as pollution and environmental degradation that reduce quality of life, meaning growth may come at hidden costs to welfare.
Inflation, deflation and how the CPI measures them

How often is the CPI basket of goods updated, and why?

Show the answer
It is updated annually to reflect changing consumer spending patterns.
The limitations of the CPI, and the RPI

What is the Retail Prices Index (RPI)?

Show the answer
An alternative measure of inflation that includes housing costs such as mortgage interest payments and council tax.
The effects of inflation

Why might a firm's international competitiveness decline during inflation?

Show the answer
If domestic inflation is higher than that of trading partners, exports become relatively more expensive.
Measuring employment, unemployment and inactivity

Give three sources of seasonal variation in economic data.

Show the answer
The weather (for example in construction and farming), holidays and festivals (such as Christmas retail spending and summer tourism), and the academic calendar (such as school and university leavers entering the labour market).
The effects of unemployment

How does unemployment reduce workers' future employability?

Show the answer
Gaps in employment history and loss of skills make it harder for workers to find new jobs.
The components of the current account

How is the balance of trade in services measured?

Show the answer
It measures the difference between the value of service exports and service imports.

The 12 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
Measuring growth: real GDP, GDP per capita and GNI	Recall questions on real against nominal GDP, total GDP and GDP per capita, value and volume measures, GNI, comparing growth rates between countries and over time, and converting nominal figures into real terms with the GDP deflator.	22
Purchasing power parity and the limitations of GDP	Recall questions on why PPP-adjusted figures compare living standards better, and on what GDP leaves out.	15
National wellbeing and the Easterlin paradox	Recall questions on the measures the UK uses beyond GDP, subjective happiness, and what the Easterlin paradox implies for policy.	10
Inflation, deflation and how the CPI measures them	Recall questions on inflation, deflation and disinflation, how the CPI basket and weights work, calculating the rate of inflation, and the difference between a percentage point change and a percentage change.	16
The limitations of the CPI, and the RPI	Recall questions on what the CPI misses, and on how the RPI differs in coverage and in the formula it uses.	8
Demand-pull, cost-push and monetary causes of inflation	Recall questions on demand-pull and cost-push inflation, the sources of each, and the monetarist account.	9
The effects of inflation	Recall questions on what inflation does to consumers, savers, borrowers, firms, workers and the government, and on the wage-price spiral.	15
Measuring employment, unemployment and inactivity	Recall questions on the claimant count and the ILO measure applied through the Labour Force Survey, unemployment against under-employment, the employment, unemployment and inactivity rates, and why seasonally adjusted figures are used and where they fall short.	28
The causes of unemployment, migration and skills	Recall questions on structural, frictional, seasonal and cyclical unemployment, real wage inflexibility, and the part played by migration and skills.	19
The effects of unemployment	Recall questions on what unemployment does to consumers, firms, workers, the government and wider society, and on hysteresis.	18
The components of the current account	Recall questions on trade in goods and services, primary and secondary income, and what falls under each.	15
Current account deficits, surpluses and global imbalances	Recall questions on how a deficit is financed, why persistent deficits matter, and how growth, inflation and the exchange rate move the balance.	13

Measures of Economic Performance is 188 of the 2,508 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.