Economics Flashcards
How is economic growth measured?
using economic performance indicators such as inflation, unemployment, cash rate etc.
What is inflation and how is it measured?
When the general level of prices paid for goods and services increases over a certain period of time. Inflation is measured using the Consumer Price Index, a measurement of price changes a constant basket of goods and services, representative of what households in particular areas are using.
What is economic growth?
The rate of which the amount of Gs + Ss produced per person increases within a specific period of time
When does unemployment occur?
When members of the labour force (people of working age that are looking for work and are not in full-time education) are not actively seeking employment or are not employed.
What are the 3 main types of unemployment?
Structural: Form of unemployment caused by a shift in skills that workers can offer and the skills needed by employers from workers. this is often due to factors such as technological changes.
Frictional: Unemployment which exists in any economy due to people being in the process of moving from one job to another.
Cyclical: Unemployment that occurs due to business cycle fluctuations.
Define living standards:
Measures of the material and non-material wellbeing of a a person or community. Material living standards refer to goods and services such as housing and health services while non-material factors refer to factors that cannot be measured using GDP (crime rates, freedom of speech etc.)
Define cost-push inflation:
type of inflation where general prices rise due increases in the cost of production (wages, raw materials etc.)
What is demand-pull inflation?
inflation that occurs when the demand for a good or service is higher than the supply, allowing producers to raise prices.
What is income inequality and how is it measured?
uneven distribution of household or individual income across the participants of an economy. It is measured using the Lorenz Curve and Gini Coefficient.
How do Lorenz Curves and Gini coefficients measure income inequality?
Lorenz curves compare a line of perfect equality to the curve created by the relationship between the cumulative income and population as a percentage. Gini coefficients show the income distribution in a country with a number between 0 and 1, with 0 being perfect equality and 1 being perfect inequality.
Give example/s of Government policies implemented to grow the economy:
Monetary Policy (monetary authority such as Central Bank controls supply of money) : Central Banks/ Govts. cut interest rates, encouraging investment and consumer spending as consumers have a higher disposable income and less incentive to save. Fiscal Policy (use of Government expenditure and collecting revenue) : Governments cut taxes and increase Govt. spending as this creates creates disposable incomes for consumers and government spending provides an economic stimulus by creating jobs.
Define GDP:
Gross Domestic Product: Total market value of all the goods/services produced in a country within a time frame.
