Brainscape's Knowledge GenomeTM

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


See full index

Economics > IE - 2(5,9) > Flashcards

IE - 2(5,9) Flashcards

1
Q

What is macroeconomics?

A

The study of the economy as a system.

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

What is GNP?

A

Gross National Product measures the income of an economy (what its citizens earn), the quantity of goods and services the economy can afford to purchase.

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

What is the difference between GDP and GNP?

A

GDP refers to the domestic levels of production. GNP measures the production of any person or corporation of a country. GNP includes entities outside the country.. GDP will include companies that work within a country but don’t actually come from the respective country.

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

What is the business cycle?

A

Refers to swings in output around an economy’s trend rate of growth.

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

What is economic growth?

A

A rise in real GNP.

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

What is the labour force?

A

People at work or looking for work.

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

What is the unemployment rate?

A

The fraction of the labour force without a job.

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

What is the inflation rate?

A

The percentage increase in the average price of goods and services.

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

When was the golden age of unemployment and why did it end?

A

During 1950-1960 unemployment stated at around 2%. Unemployment also stayed low during 1960-1970. This was due to rapid growth and low inflation. In the 1970s OPEC quadrupled the oil price, there was high inflation, low growth and increasing unemployment.

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

How did Thatcher influence inflation.

A

In the 1980s, the Thatcher government reduced inflation but lost control in the late 1980s when it let the economy grow to rapidly, leading to more inflation.

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

What is the circular flow?

A

Shows how real resources and financial payments flow between firms and households. Households provide factor services to firms who use the factors to make output. Households receive factor incomes from firms who in turn rent factor services from households. Households buy output from firms leading to firms selling output to households.

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

What are factor incomes for households?

A

Wages, rent and profits.

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

Why is the circular flow model flawed?

A

It assumes households spend all of their income on real resources and that all output from firms is sold.

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

What relationship is assumed to be shared by all factors in the circular flow model?

A

Economic activity can be measured by valuing total spending, total output or total earnings. All three methods give the same answer.

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

What does the circular flow between firms and households leave out?

A

Savings and investment, government spending and taxes, transactions between firms with the rest of the world?

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

What is GDP?

A

Measures the output made in the domestic economy, regardless of who provided the production inputs.

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

What is value added?

A

The increase in the value of goods as a result of the production process.

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

What are final goods?

A

Goods purchased by the ultimate user, either households buying consumer goods or firms buying capital goods such as machinery.

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

What are intermediate goods?

A

Partly finished goods that form inputs to a subsequent production process that then uses them up.

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

Why do we need to understand value added?

A

In order to insure we don’t double count certain transactions in the economy. Value added would be the firms output - the costs of goods used to make the final products (such as raw materials and machinery).

21
Q

What is investment? (firms)

A

The purchase of new capital goods by firms.

22
Q

What are savings?

A

The part of income not spent on buying goods and services.

23
Q

What is a leakage (from the circular flow)?

A

Monet no longer recycled from households to firms (savings).

24
Q

What is an injection (into the circular flow)?

A

Money that flows to firms without being recycled through households.

25
Q

What is real economics growth?

A

Increases in real GNP.

26
Q

What is macroeconomic policy?

A

A variety of policy measures used by the government to affect the overall performance of the economy.

27
Q

What is inflation?

A

A sustained increase in the general price level.

28
Q

What is output?

A

Real GNP measures total income of an economy. Closely related to the economy’s total output.

29
Q

Expenditure in the economy formula?

A

Y = C + I + G + (X -Z)

Z instead of M. Y = AD.

30
Q

National income?

A

Sum of incomes paid for factor services.

31
Q

National output?

A

Sum of output (value added) produced in the economy.

32
Q

What is the GNP deflator?

A

An index showing what happens to the price of all good (CPI not enough)

33
Q

What is a distinct difference between real and nominal?

A

Real measures the change in something over time. Nominal is looking at now.

34
Q

What measurement should be used to take into account population changes into account?

A

GNP per capita.

35
Q

Other than GNP, what contributes to economic welfare?

A

Doesn’t mention natural disaster, education levels, intelligence levels, closeness to water etc. HDI may be a better measure but still leaves out certain other welfare indicators.

36
Q

What is potential output?

A

The output the economy would produce if all factors of production were fully employed. It is a long-run concept.

37
Q

What is actual output?

A

What is actually produced in a period. This

may diverge from the potential level.

38
Q

What is the output gap?

A

The difference between actual and potential output.

39
Q

What are exogenous variables?

A

External factors that affect variable.

40
Q

What are endogenous variables?

A

Internal factors that affect a variable.

41
Q

What do Exogenous or endogenous variables do?

A

Shift, rotate or move along a curve.

42
Q

What is Stabilisation Policy?

A

Government actions to try to keep

output close to its potential level.

43
Q

What is a budget deficit?

A

The excess of government outlays over

government receipts

44
Q

What is the national debt?

A

The stock of outstanding government debt

45
Q

What is Fiscal policy?

A

The government’s decisions about spending and taxes

46
Q

What effect will direct proportional taxes have on the consumption function on a graph?

A

Affects the slope of the consumption function and hence the slope of the AD schedule.

47
Q

What affect will lump-sum taxes have on the AD schedule?

A

Will affect the position of the AD schedule.

48
Q

What does the balanced budget multiplier tell us?

A

A rise in government spending plus an equal rise in taxes (to keep budget balanced) will increase output.

Economics (6 decks)

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