Economics Flashcards
(36 cards)
Define Economic Growth
Is an increase in the amount of goods and services produced per head of the population over a period of time.
Define GDP
Is the total value of goods produced and services provided in a country during one year.
Define Unemployment
Unemployment is when someone is willing and able to work but does not have a paid job. The unemployment rate is the percentage of people in the labour force who are unemployed.
Define inflation
Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices.
How is economic growth measured?
The size of an economy is typically measured by the total production of goods and services in the economy, which is called gross domestic product (GDP).
Limitations of GDP
GDP is an indicator of a society’s standard of living, but it is only a rough indicator because it does not directly account for leisure, environmental quality, levels of health and education, activities conducted outside the market, changes in inequality of income, increases in variety, increases in technology or the sustainability of an economy.
Relationship between GDP and standard of living.
GDP per capita is often used as a broad measure of average living standards, high levels of GDP per capita do not necessarily mean high levels of household disposable income, a key measure of average material well-being of people.
How’s unemployment measured
the method of counting or directly estimating the number of unem- ployed or the indirect method of estimating the reduction in the number of persons employed at certain times or between one date and another.
What is cyclical unemployment?
Cyclical unemployment is when natural business cycles bring about a loss of jobs.
What is seasonal unemployment?
Seasonal unemployment is when seasonal cycles reduce the need for certain jobs.
What is frictional unemployment?
Frictional unemployment is when workers change jobs and are unemployed while waiting for a new job.
What is structural unemployment?
Structural unemployment is when economical shifts reduce the need for workers.
Effects of unemployment
The personal and social costs of unemployment include severe financial hardship and poverty, debt, homelessness and housing stress, family tensions and breakdown, boredom, alienation, shame and stigma, increased social isolation, crime, erosion of confidence and self-esteem, the atrophying of work skills and ill-health
How is inflation measured?
The government measures inflation by comparing the current prices of a set of goods and services to previous prices
Demand-pull inflation
When demand surpasses supply, higher prices are the result. This is known as demand-pull inflation.
Cost-push Inflation
This is when overall prices increase due to increases in the cost of wages and raw materials.
Inflation expectations
Inflation expectations are simply the rate at which people and businesses, expect prices to rise in the future.
Effects of Inflation
If prices are increasing faster than people’s nominal incomes, they will be able to afford fewer goods and services over time. Workers may then seek larger wage increases to compensate for the effects of higher inflation on their purchasing power.
What is HDI?
The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.
What is HPI?
The Happy Planet Index is an index of human well-being and environmental impact. Each country’s HPI value is a function of its average subjective life satisfaction, life expectancy at birth, and ecological footprint per capita.
What is GNI?
The gross national income, previously known as gross national product, is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product, plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents.
What is a peak on the business cycle?
A peak is the point at which expansion reaches its highest point before contracting.
What is a trough on the business cycle?
A trough is the point at which contraction reaches its lowest point before expanding.
What is expansion on the business cycle?
Expansion is when the economy experiences relatively rapid growth, interest rates tend to be low, production increases, and inflationary pressures build. (Expansion is essentially just growth)
