9 - Macroeconomic Performance Flashcards
What are the objectives of government policy?
Economic Growth, Price Stability, Minimise Unemployment, Stable balance of payments.
What has happened to the UK’s GDP since 1949?
It has increased year on year.
What % of GDP growth is considered stable for an advanced economy?
2-3%.
In which years has GDP growth contracted, over the last 30 years?
1992, 2008, 2020.
What does the growth in GDP per capita mean for living standards?
It means the standard of living is higher than it used to be, and the poorest can afford more than they used to.
Why is GDP per capita not always accurate?
It doesn’t give the full picture of the proportion of wealth in a country.
What has happened to inflation since 2000?
It has remained mostly stable since 2000, and on or around the government’s target of 2% for 19 of 23 years.
In which years has inflation not been stable?
2008 and 2011 - Following the effects of the financial crisis. 2022 and 2023 - Following the effects of COVID, and the war in Ukraine.
How does the UK’s inflation rate compare to other G7 countries?
All of the G7 countries, excluding Japan, have had stable rates of inflation, and all have peaked at the same time.
What does the comparison of inflation rates show?
That there is lots of economic integration between G7 countries.
What is the current unemployment rate?
4.2%.
What has happened to the unemployment rate since 1971?
It has not remained stable, peaking at around 12% in 1985, and 1992, and following 2008, and then got lower after that.
How does the unemployment rate compare to other G7 Countries?
The UK tends to have a lower unemployment rate than other G7 countries, particularly France, Italy, and Canada.
Why is Italy’s unemployment rate higher than other G7 countries?
An ageing population, so they spend more money on pensions and healthcare.
Which events in the UK caused high unemployment?
Deindustrialisation, Black Wednesday, 2008 Financial Crisis, Covid-19.
Is the trade balance of the UK Positive or Negative?
Negative, meaning we import more than we export.
Why is a negative trade balance bad for the UK?
We are a developed economy, so not much of our income comes from the sale of goods overseas.
Why was the trade balance positive during Covid?
We were buying less goods, and our trade balance of services increases.
Why do we have a negative trade balance of goods?
Lots of manufacturing has moved overseas.
How is the government budget balanced?
There is a budget deficit, meaning they spend more than they make.
Since when has the UK had a budget deficit?
2001.
