Econ - 4.1, 4.2 Flashcards
(14 cards)
1
Q
role of government - definition
A
- to improve general welfare of its people
- collects tax revenue in order to fund for its expenditure
2
Q
3 levels of operation for governments
A
- local
- national
- international
3
Q
local role
A
- collects taxes to fund local survices
- eg. rubbish colelction, street lighting, schools, hospitals
4
Q
national role
A
- how to achieve macroeconomic aims
5
Q
international role
A
- international dimension as modern economies need to trade with other countries
- economy may need to be apart of a trading bloc
6
Q
5 macroeconomic aims
A
- economic growth
- full employment / low unemployment
- price stability
- balance of payment stability
- redistribution of income
7
Q
economic growth -macroeconomic aims
A
- increase in a country’s GDP over time
- creates jobs and improves living standards
8
Q
full employment / low unemployment -macroeconomic aims
A
- aim is to have as many people as possible working
- low unemployment (reduced proverty)
9
Q
price stability -macroeconomic aims
A
- low & stable inflation
- stable prices protect peoples purchasing powers and help businesses plans
10
Q
balance of payments stability - macroeconomic aims
A
- exports = imports
- stable balance avoids too much debt / currency problems
11
Q
redistribution of income / wealth - macroeconomic aims
A
- aims to reduce income inequality (for decent standard of living)
- helps maintain social stability & fairness
12
Q
economic growth vs stable prices
A
rapid growth => demand rising to fast => pushing prices up
13
Q
economic growth vs balance of payments stability
A
growing economies => increased imported goods => worsening the trade balance
14
Q
fair income distribution vs economic growth
A
redistribution of income => reduce incentives for businesses to invest and grow
