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E2 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Economic Growth

A

The expansion of the national economy measured in % terms compared to previous years

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2
Q

GDP

A

Gross domestic product; the total value of a nations income produced by economic activity from within its boarders
aka Gross value added

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3
Q

GNP

A

Gross national product; takes into account net income earned overseas

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4
Q

Fiscal policy

A

Uses government spending, tax and borrowings to influence the patten of economic activity, the level of growth of aggregate demand, output and employment

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5
Q

Monetary policy

A

Uses interest rates and the level of money supply to relate or deflate the economy

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6
Q

Monetary policy: Reflate

A

Cut interest rates
Increase money supply
Quantitative easing

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7
Q

Monetary policy; Deflate

A

Increase interest rates

Reduce the money supply

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8
Q

To increase the money supply

A

Lower the banks reserve requirements or relax direct controls over the bank’s ability to lend

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9
Q

Quantitative easing

A

An expansionary monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets to stimulate the economy and increase liquidity

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10
Q

Supply side policies

A

Policies that seek to enhance long-term growth prospects in an economy by adopting policies that improve efficiency and aggregate supply within an economy

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11
Q

Fiscal policy benefits

A

Effective for short-term impact on demand. Can be targeted at certain sectors

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12
Q

Fiscal policy drawbacks

A

Potential inflationary tendencies. Potential impact on debt burden of the economy

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13
Q

Monetary policy benefits

A

Effective at controlling key policy target on inflation

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14
Q

Monetary policy drawbacks

A

Not as flexible at targeting individual market sectors (interest rates apply to everyone)

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15
Q

Supply side policy benefits

A

Not inflationary. Doesn’t automatically lead to increases in government borrowing.
Increases competitive standing in the world

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16
Q

Supply side policy drawbacks

A

Long term policy.

Tax cuts in the short term may lead to inflation (supply can’t match demand quickly enough)

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17
Q

National income accounting

A

How a country attempts to measure the goods and services and monetary flows through an economy

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18
Q

Balance of payments

A

Records of financial transactions between a country and the international economy

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19
Q

Current account

A

Measures trade in goods and services

20
Q

Financial and capital output

A

Tracks capital flows in and out

21
Q

Industry competitor

A

Same products but different size, striation and variations (easyjet vs british airways)

22
Q

Brand competitor

A

Similar size, structure and products

23
Q

Form competitor

A

Satisfy the same needs in different ways (cinema vs netflix)

24
Q

Generic competitor

A

Competing for the same disposable income (takeaway pizza vs fish and chips)

25
Q

Detailed competitor analysis

A

Things including their resources (people), assumptions about the industry, USP and competitive advantage

26
Q

Market share

A

Measured relative to the largest competitor in the market

27
Q

Market growth

A

A measure of the markets attractiveness

28
Q

STARS

A

HOLD
high growth products competing in markets where they are relatively strong that need heavy investment to sustain their growth

29
Q

QUESTION MARKS

A

BUILD SHARE
Products with a low market share but operate in high growth markets, need heavy investment to grow market share against powerful competitors

30
Q

CASH COWS

A

HARVEST

Low growth products with a high market share, little need of investment so provide continued profits to invest in stars

31
Q

DOGS

A

DIVEST

Low relative share in less attractive markets. Dogs should generate positive cash flows or should be allowed to die.

32
Q

FDI

A

Foreign direct investment - where organisations invest oversees usually to benefit from a lower cost base

33
Q

Export credit insurance

A

Political risk insurance, provided by most governments and the world bank, to encourage investment in emerging markets

34
Q

Lobbying

A

Attempting to influence policies or decisions

35
Q

Buffering

A

An attempt to influence ahead of a policy or decision being made

36
Q

Bridging

A

Ensuring the company knows what is required of companies

37
Q

Core competencies

A

Integral to an organisation’s competitive advantage so do not outsource

38
Q

Complementary competencies

A

Can be outsourced due to their technical complexity but only given to a trusted partner

39
Q

Residual competencies

A

Can be outsourced as basic, arms-length transaction e.g. cleaning

40
Q

Tariffs

A

A tax on imports used to restrict imports and raise revenue for the government

41
Q

Import quotas

A

Directly reduce the quantity of a product that is imported and indirectly reduces the amount of money that the sport producers receive.

42
Q

Voluntary export restraint (VER)

A

Similar to an import quota but the exporting country voluntarily restricts the number of goods that is ships to its trading partner.

43
Q

Export subsidy

A

A payment to a domestic producer who exports a good abroad

44
Q

Trade embargoes

A

The prohibition of commerce and trade with a certain county

45
Q

Administrative controls

A

Onerous red tape ad admin procedures on exports from abroad

46
Q

Balanced trade scheme

A

Each country will agree to purchase the same value of the goods as it sells to the other

E2 (11 decks)

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