644989
Description
Mind Map by mikaela.farrugia, updated more than 1 year ago
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Created by mikaela.farrugia
almost 11 years ago
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2.3- Indicators of the level of economic activity
- regularly measure changes in
Australia’s production of goods and
services.Want to assess whether we are
better or worse off in regards to living
standards
- Types of
productive
activity and
their
measurement
- measuring productive activity is
difficult and inaccurate
- Two types
- economic activity
- non market activity
- economic activity
- measuring productive activity is
difficult and inaccurate
- Economic Activity
- GDP measures this
- estimate level of economic activity.
Represents total annual value ($) of
goods and services produced by a nation.
- measured annually or quarterly
- measured annually or quarterly
- estimate level of economic activity.
Represents total annual value ($) of
goods and services produced by a nation.
- GDP needs to be adjusted accordingly because
prices increase and decrease regularly
- Real value of GDP is known as
chain value GDP but this is still far
from accurate
- C.V GDP = guesses the value of some products. Quality of the product
is also difficult to value and therefore aren't really considered in GDP
- C.V GDP = guesses the value of some products. Quality of the product
is also difficult to value and therefore aren't really considered in GDP
- GDP gives no indication of how goods and services are
produced and shared. No allowance allocated to hours taken to
make the product or the size of labour force.
- GDP measures this
- Non-market Activity
- Define: production that is not actually sold and occurs mostly
within individual households, such as personal houseworks
and gardening, or the black market.
- often ignored. Isn't included in real GDP
- the output of goods aren’t actually sold and its value
is to difficult to measure
- not included in GDP it is not taking into a full
productive capacity
- Define: production that is not actually sold and occurs mostly
within individual households, such as personal houseworks
and gardening, or the black market.
- Indicators of
economic activity
- Many other types of
indicators apart form
GDP.
- three main categories
- 1 - Lagging indicator of
economic activity
- Define: changes in economic activity some
time after the event has occurred because
they take time to respond.
- Do not tell us what is happening currently
- eg) GDP [only tells us what
happened in the past 3 months]
- other e.g.) unemployment rates, CPI or inflation rates and
changes in weekly earnings.
- Define: changes in economic activity some
time after the event has occurred because
they take time to respond.
- 2 - Coincident indicators of
economic activity
- Move very closer with
actual changes in level
of economic activity
- Published in short intervals
and tell us what is happening
right now.
- Monthly changes in retail
sales is an example
- Move very closer with
actual changes in level
of economic activity
- 3 - Leading indicators
- Define: allow economic forecasts or
predictions to be made about the likely
future level of economic activity
- Not completely reliable they forecast
events in the future
- eg) business confidence index, new housing
approvals, changes in economic activity of
our trading partners.
- Define: allow economic forecasts or
predictions to be made about the likely
future level of economic activity
- 1 - Lagging indicator of
economic activity
- Many other types of
indicators apart form
GDP.
- Looking for patterns in
indicators of economic
activity
- examining indicators involves looking at long
term trends, short term cycles, seasonal factors
and erratic behaviour or swings
- Four types of patterns
- 1- Long term trend patterns
- 10 year or longer period of time
- the average direction of economic activity is rising
- Used for comparison
- 10 year or longer period of time
- 2- Cyclical patterns
- statistics plotted over a period of time and follow a
fairly regular wave where there are peaks and
troughs.
- Normal behaviour of GDP, unemployment, inflation and
the current account deficit.
- statistics plotted over a period of time and follow a
fairly regular wave where there are peaks and
troughs.
- 3- Season patterns
- Economic activity could move in a similar
direction during same months each year
- Applies to Seasonal unemployment
- Soft drinks and ice creams up in summer
- Economic activity could move in a similar
direction during same months each year
- 4- Erratic patterns
- No real pattern for
economic activity
- Reaction to a once off event such as the
Olympics and 9/11 attacks
- No real pattern for
economic activity
- 1- Long term trend patterns
- examining indicators involves looking at long
term trends, short term cycles, seasonal factors
and erratic behaviour or swings
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