4.2.1.1 Flashcards
The objectives of government economic policy (17 cards)
What is macroeconomics?
Macroeconomics is economics that considers the economy in its entirety, studying relationships between countries and how one economy can affect another.
What are some key areas that macroeconomics examines?
Macroeconomics looks at inflation, economic growth, human development, international trade, and globalisation.
How do households generate income?
Households receive income through wages and salaries from jobs and investments.
What inputs do firms hire for production?
Firms hire land, labour, and capital inputs.
What do firms receive from consumers?
Firms receive payments from consumers buying their goods and services.
Why do governments collect taxes?
Governments collect taxes to spend on public services such as education and healthcare.
What is one effect of international trade on the UK?
International trade effects millions of jobs.
What are the objectives of macroeconomic policy?
Objectives include sustainable economic growth, low and stable inflation, low unemployment, and a satisfactory balance of payments.
What additional goals may macroeconomic policy aim for?
Goals include equitable distribution of income, improved welfare or living standards, and a strong fiscal position.
What trade-offs might governments face in achieving macroeconomic objectives?
Trade-offs include unemployment vs inflation, economic growth vs inflation, and economic growth vs equality.
True or False: Macroeconomic objectives can always be achieved simultaneously.
False
Fill in the blank: The UK remaining competitive in international markets is affected by _______.
International trade
What can an overheating economy lead to?
Accelerating inflation.
What is a potential conflict between economic growth and the balance of payments?
A consumer boom may cause the trade deficit to rise.
What might rapid economic growth lead to concerning the environment?
Increased pollution.
What is a concern regarding income inequality and economic growth?
Significant negative correlation meaning that if income inequality rises then economic growth falls.
Does high inequality cause slower long-term growth?
Yes.
