Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics > Theme 2: Measures of Economic performance > Flashcards

Theme 2: Measures of Economic performance Flashcards

1
Q

Economic growth

A

Rise in the value of GDP (National output)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Real GDP

A

Value of GDP adjusted for inflation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Nominal GDP

A

Value of GDP without being adjusted for inflation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Total GDP

A

Combined monetary value of all goods and services produced within a country’s borders during a specific time period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

GDP per capita

A

GDP divided by population

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Volume of GDP

A

The volume of GDP is the sum of value added, measured at constant prices, by households, government, and industries operating in the economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Value of GDP

A

Monetary value of GDP at prices of the day.

Volume X current price level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Two ways national income can be measured?

A

Gross national product and Gross national income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Gross national product (GNP)

A

The market value of all products produced in an annum by the labour and property supplied by the citizens of one country.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Gross National Income (GNI)

A

Sum of value added by all producers who reside in a nation, plus net overseas interest payments and dividends.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Purchasing Power Parity

A

The theory that estimates how much the exchange rate needs adjusting so that an exchange between countries is equivalent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

The limitations of GDP to compare living standards.

A

1- Doesn’t give indication of distribution.
2- GDP may need to be recalculated in terms of purchasing power.
3- Doesn’t include hidden markets eg black market.
4- GDP gives no indication of welfare.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

According to ONS what 6 factors effect the wellbeing of people in the UK?
CHEEEF

A

housing,
financial security,
community safety,
employment,
education
environment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Inflation

A

The sustained rise in the general price level over time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Deflation

A

Where the average price level in the economy falls. Negative inflation rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Disinflation

A

a reduction in the rate of inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How is inflation calculated?

A

consumer price index

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

4 key points on CPI

A

1- Survey
2- Weighted basket of goods
3- Measures average price change of the goods
4- updated annually

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Limitations of CPI when measuring inflation

A

Only average household. Slow to respond.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Two measures of inflation

A

CPI and RPI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Retail price index

A

Unlike CPI, RPI includes housing costs, such as mortgage interest and council tax. This is why RPI tends to have a higher value than CPI. Excludes top 4% of earners and low income pensioners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Two causes of inflation

A

demand pull inflation and cost push inflation

23
Q

Demand pull inflation

A

Aggregate demand is growing unsustainably.

24
Q

Main triggers of demand pull inflation?

A

1-Depreciation of the exchange rate.
2-Fiscal stimulus eg lower taxes or more government spending.
3- Lower interest rates
4- High growth in UK exports

25
Q

Cost push inflation

A

When prices rise due to an increase in the cost of production.

26
Q

Main triggers of cost push inflation

A

a monopoly exists,
wages increase,
natural disasters occur,
regulations are introduced,
exchange rates change

27
Q

Hyperinflation

A

A very rapid rise in the price level; an extremely high rate of inflation.

28
Q

Effect of high inflation on consumers

A

Loss of purchasing power. …
Higher Interest Rates. …
Higher Prices For Everything. …
Economic Growth Slows. …
Anti-Inflationary Measures Can Cause A Recession

29
Q

Effect of high inflation on firms

A

can increase the cost of goods and services that the target company needs to purchase, thereby reducing its profits.
Furthermore, margins could deteriorate as all the costs cannot be passed through to customers.

30
Q

Effect of high inflation on the Government

A

Forced to increase the value of the state pension and welfare payments because the cost of living is increasing.

31
Q

Effect of high inflation on workers

A

slower hiring, increased layoffs, slower industrial production and a stalled housing market

32
Q

How is unemployment measured?

A

Claimant count and labour force survey.

33
Q

Why is the labour force survey more accurate?

A

Takes into account part time unemployment, they are less likely to claim on the claimant count.

34
Q

Unemployment

A

are those able and willing to work, but are not employed. They are actively seeking work and usually looking to start within the next two weeks

35
Q

Underemployment

A

those who have a job, but their labour is not used to its full productive potential. Those who are in part-time work, but are looking for a full-time jobs are underemployed.

36
Q

What are the effects of unemployment on consumers?

A

Less disposable income and their standard of living might fall. Psychological consequences of losing job.

37
Q

What are the effects of unemployment on firms

A

Firms have a larger supply of labour to employ from. Causing wages to fall, which would help firms reduce their costs.

38
Q

What are the effects of unemployment on workers?

A

May lose existing skills if not used and may see a fall in their wages.

39
Q

What are the effects of unemployment on the government?

A

Government might have to spend more on job seekers allowance. Receive less tax revenue.

40
Q

What are the effects of unemployment on society?

A

Workers could have produced goods and services and could have negative externalities such as vandalism if the unemployment rate increases.

41
Q

Types of unemployment

A

Structural, frictional, seasonal, cyclical and real wage inflexibility.

42
Q

structural unemployment

A

This occurs with a long term decline in demand for the goods and services in an industry, which costs jobs.

43
Q

Frictional unemployment

A

This is the time between leaving a job and looking for another job.

44
Q

seasonal unemployment

A

This occurs during certain points in the year, usually around summer and winter.

45
Q

cyclical unemployment

A

This is caused by a lack of demand for goods and services, and it usually occurs during periods of economic decline or recessions.

46
Q

Real wage inflexibility unemployment

A

Wages above the market equilibrium may cause unemployment. Classical economists argue that by letting wages fall to the equilibrium level, there would be no unemployment.

47
Q

Exports

A

goods and services sold to foreign countries, and are positive in the balance of payments. This is because they are an inflow of money.

48
Q

Imports

A

Goods and services bought from foreign countries, and they are negative on the balance of payments. They are an outflow of money.

49
Q

What is the balance of payments made up of?

A

current account
capital
official financial account.

50
Q

The UK has a current account…

A

deficit

51
Q

UK government’s macro economic objectives are to have…

A

Full employment, low and stable inflation, sustainable current account on the balance of payments, and sustainable economic growth.

52
Q

In the UK, during periods of economic decline or recessions, the current account deficit ………. This is because consumer spending falls.

A

falls

53
Q

In theory, the sum of all countries’ trade balances should be…

A

Zero, since what one country exports will be imported by another country.

Economics (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions