6.2

Question 1

Performance indicators

Answer 1

• provides information for judging the success or failure of a particular type of government policy
• usefulness depends on whether it provides accurate information about the state of the economy
• almost always presented in statistical data

Question 2

Monetary policy indicator example

Answer 2

Size and rate of change of the money supply

Question 3

Fiscal policy indicator example

Answer 3

Size and rate of change of the budget deficit

Question 4

Lead indicators

Answer 4

• provide information about the future state of the economy
• surveys of consumer & business confidence and investment intentions provide information about future aggregate demand
• House building starts & No. of pre-booked holidays provide information about future spending
• Data on commodity and input prices can signal future changes in RPI

Question 5

Lag indicators

Answer 5

• provide information about past & possibly current economic performance
• extent to which policy objectives have been achieved
• Data on level of GDP, current & recent employment/unemployment figures