EconomicsNotes

  GDP National Income is a metric of the flow of money in an economy represented by its goods, services, and wealth in a given period of time. It is essentially the same as National Output and National Expenditure, and is sometimes used as equivalent to Gross National Product (GNP.) In most economic discussions, GNP is adjusted twice. Firstly, economists tend to strip out net income earned abroad from GNP. This gives a figure for Gross Domestic Product. This is useful for economic studies because it focuses the analyst on what is going on within the economy. Secondly, economists usually adjust the nominal, ‘raw’ GDP figure for price changes, which leaves ‘real GDP’ as the key figure. [1] Change in Real GDP is therefore the most used and important indicator economists use. It tells the examiner about growth and allows for assumptions about the economic cycle . Real GDP tells economists about the accumulated flow of money around an economy but it does not really give an in...

  Unemployment is often a personal and family tragedy in a work-oriented society, and a problem for economists. It is a problem for economists because defining it, and differentiating the different types of unemployment, is somewhat tricky. Unemployment is also a lagged indicator of economic conditions. This means that the rate which is apparent now refers in most societies back several months at least, and that policy could be reacting to conditions which no longer apply. For instance, growth and recovery can happen at the same time as rising unemployment; a recession and downturn can start with unemployment static or falling.   Unemployment is also (usually) seasonally adjusted . In the United Kingdom, the Unemployed are defined as a group of people who are available for work, able to do it, and willing to seek it, but who cannot find a job at the market wage. Rather confusingly, there are different technical definitions however. ·       ...

  Inflation is the general tendency of prices to rise over time. It is not simply an increase in one or two prices, or a temporary ‘blip’ upwards. There are three elements which students and writers on the topic must always grasp and build into any definition; ·          Prices rise, or the value of money falls ·          In general or on average ·          In a sustained way over time Such a definition puts an emphasis on the measurement of prices, of course, and also allows for types and causes of inflation to be separated out. Measurement is usually via some form of weighted index of average prices . This is sometimes referred to as a ‘ basket of goods and services.´   The CPI and RPI There are several measurements which the UK Government uses. These include the Consumer Price Index , (CPI), the CPI including Housing costs (CPIH ), the Ret...

Strangely enough for something which has long been characterised as a dismal profession, there are quite a few jokes and wry observations which originate with economists or economic historians, and more which have been enjoyed by them. Many of these observations have a ring of truth about them. One I like is adapted from psychiatry; economics has physics envy.   That is to say, economists have often been characterised as people who would like to be like physicists, with ‘laws’ like those of Thermodynamics, and verifiable Bolzmann constants and so forth. Some economists have taken this approach further and have embraced Quantum economics, claiming, like Paul Ormerod, that this is a helpful perspective from which to try to understand money. People who are this certain about economics often end up so entangled in their own theories and arguments, and so disassociated from the world, that one wonders if they have any understanding of physics at all.   These circumstances are somew...