key-economic- Indicators muqeem

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Key Economic Indicator

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Key Concepts and Terms in Economics for Public Servants:

Key Concepts and Terms in Economics for Public Servants Muqeem ul Islam Additional Directing Staff National Institute of Management National School of Public policy muqeemz@gmail.com 0343-5090648

Meaning of Economic Environment:

Meaning of Economic Environment

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Totality of economic factors, such as employment, income, inflation, interest rates, productivity, and wealth, that influence the buying behavior of consumers and firms The economic environment comprises of: Income and wealth : Income in an economy is measured by GDP, GNP and per capita income. High values of these factors show a progressive economic environment. · Employment levels : High employment represents a positive picture of the economy. However, there are many forms of unemployment, including partial employment and disguised unemployment. · Productivity: This is the output generated from a given amount of inputs. High levels of productivity support the economic environment.

Classifications of the Economic Environment:

Classifications of the Economic Environment Microeconomic environment : It includes the economic environment of a particular industry, firm or household and is primarily concerned with price determination of individual factors. The main consideration from a microeconomic perspective is the efficient allocation of resources. This is necessary to maximize total output. Macroeconomic environment : It includes all the economic factors in totality. The main consideration here is the determination of the levels of income and employment in the economy.

Foundation of Economic Activity?:

Foundation of Economic Activity?

Foundations of Economic Activity in a society : Production, Consumption/Usage, Market, Prices, Supply, Demand:

Foundations of Economic Activity in a society : Production, Consumption/Usage, Market, Prices, Supply, Demand

Factors Affecting the Economic Environment:

Factors Affecting the Economic Environment Inflation and deflation : Inflationary and deflationary pressures alter the purchasing power of money. This has a direct impact on consumer spending, business investment, employment rates, government programs and tax policies. Interest rates: Interest rates determine the cost of borrowing and the flow of money towards businesses. Exchange rates: This impacts the price of imports, the profits made by exporters and investors and employment levels (also through the impact on the tourism industry). Monetary and fiscal policy : This helps in attaining full employment, price stability and economic growth.

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The economic environment is also influenced by various such as : 1. Political 2.Social and 3.Technological factors These include a change in government and the development of new technology and business tools.

Classification of Economies :

Classification of Economies Economies of countries can be classified based on parameters: 1. Ownership of means of production a)capitalist economy b)socialist economy c) Mixed economy 2. Levels of economic development a)Developing countries b)Developed countries

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Capitalism is an economic system characterized by private ownership of productive goods and services. Socialism is an economic and political system in which private property is abolished and the means of production (i.e., capital and land) are collectively owned and operated by the state. Mixed economy , in which some of the means of production are owned by the government while some is held by private individuals.

Indicators of Economic Development:

Indicators of Economic Development

Growth versus Development:

Growth versus Development Economic growth may be one aspect of economic development but is not the same Economic growth: A measure of the value of output of goods and services within a time period Economic Development: A measure of the welfare of humans in a society

Growth:

Growth

National Income – Problems with using GDP/GNP:

National Income – Problems with using GDP/GNP Quality of life? Can changes in economic growth measure changes in the quality of life? Does additional earnings power bring with it additional stress, increases in working hours, increased health and family problems? Impact of exchange rate? Difference in exchange rates can distort the comparisons – need to express in one currency, but which one and at what value?

What Does Economic Indicator Mean?:

What Does Economic Indicator Mean? A piece of economic data, usually of macroeconomic scale, that is used by investors to interpret current or future investment possibilities and judge the overall health of an economy.  Economic indicators can potentially be anything the investor chooses, but specific pieces of data released by government and non-profit organizations have become widely followed - these include: - The Consumer Price Index (CPI) - Gross Domestic Product (GDP) - Unemployment figures - The price of crude oil

Human Development Index:

Human Development Index

Human Development Index (HDI):

Human Development Index (HDI) HDI – A socio-economic measure Focus on three dimensions of human welfare: Longevity – Life expectancy Knowledge – Access to education, literacy rates Standard of living – GDP per capita: Purchasing Power Parity (PPP)

Other Measures?:

Other Measures?

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Q&A

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