Question

identify and explain the three important measures or indicators used to describe the health of an economy.

Answer 1

Three important indicators used to identify the health of the economy are:

Growth

The growth rate of the economy plays an important role in determining the health of the economy. The performance of an economy is measured by the GDP which is the market value of all the goods and services produced within a country. GDP does not give complete information about an economy but a change in GDP does.

Price Stability

Every economy wishes to control inflation. It occurs when average prices do not change or there is a negligible change in prices. If an economy is successful in maintaining price stability, then we can say that the health of an economy is good.

Unemployment Rate

The unemployment rate is another factor which measures the percentage of the working population which is willing to work remains unemployed due to certain reasons. An economy aims to minimize unemployment in order to achieve better growth in the future.