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
