Booklet 1

Question 1

What is the name for a way of calculating economic activity as a value of the total expenditure within an economy?

Answer 1

Expenditure Method

Question 2

What refers to the value of goods and services produced in an economy in a given time period, usually a year?

Answer 2

Gross domestic product

Question 3

What refers to a flow of money received, earned or generated over time?

Answer 3

Income

Question 4

What is the name for a way of calculating economic activity as the sum of the total income of the people within an economy?

Answer 4

Income Method

Question 5

What is the name given to money that is added to the circular flow of income by going to someone other than firms or households?

Answer 5

Injections

Question 6

What is the name given to money that leaves the circular flow of income by going to someone other than firms or households (i.e. sale of exports) or which does not circulate (i.e. savings)?

Answer 6

Leakages/Withdrawals

Question 7

What is the study of economics at an aggregate scale - either the national or international level?

Answer 7

Macroeconomics

Question 8

What is the study of economics at the scale of individuals, firms and markets?

Answer 8

Microeconomics

Question 9

What is a term meaning measured using the current prices, it is sometimes referred to as “money terms”?

Answer 9

Nominal

Question 10

What is the name given to a way of calculating economic activity as the value of the total output produced within an economy?

Answer 10

Output method

Question 11

What is a term meaning measured at constant prices in order to remove the impact of inflation on data collected over time?

Answer 11

Real

Question 12

What is the value of a stock of assets at a given moment in time?

Answer 12

Wealth

Question 13

Where O = output, E = expenditure and Y = Income, what can be said of a closed economy?

Answer 13

O≡E≡Y

Question 14

What is the factor income of capital?

Answer 14

Interest

Question 15

What is the factor income of enterprise?

Answer 15

Profit

Question 16

What is the factor income of labour?

Answer 16

Wages

Question 17

What is the factor income of land?

Answer 17

Rent

Question 18

What do firms provide for households?

Answer 18

Factor Incomes
Goods and Services

Question 19

What do households provide for firms?

Answer 19

Factors of production
Household expenditure on goods and services.

Question 20

What are the three leakages?

Answer 20

Purchase of Imports
Taxation
Saving

Question 21

What are the three injections?

Answer 21

Sale of Exports
Government Spending
Investment

Question 22

What are the four main objectives of government macroeconomic policy?

Answer 22

Sustainable Economic Growth
Price Stability
Minimising Unemployment
Stable Balance of payments on current account

Question 23

What are some other possible macroeconomic objectives of the government?

Answer 23

Maintain a balanced budget
Achieve a greater equality in the distribution if income
Protect the environment