Exam

Question 1

Investment

Answer 1

The additon of capitol stock to the economy

Question 2

Budget deficit

Answer 2

When government spending exceeds government revenue

Question 3

Inflation rate

Answer 3

A measure of the percentage change in the gernal price level of goods and services in an economy over time

Question 4

Deflation

Answer 4

A sustained decrease in the general price level of goods and services in an economy

Question 5

Under employment

Answer 5

When individuals are working but their jobs don’t fully utilise their skills, experience, or the available hours they desire

Question 6

Real GDP

Answer 6

A measure of the total value of all goods and services produced in an economy, adjusted to inflation

Question 7

Direct Tax

Answer 7

Placed on income, profts and wages which is piad directly by the bearer to authorities

Question 8

Marginal Propensity To Consume

Answer 8

The proporation of an increase in income spent on concome

Question 9

Main factors Considered by BoE when setting base interest rates

Answer 9

GDP growth and spare capacity
Bank lending and credit conditions
Exchange rate movement

Question 10

Conflicts between macroeconmic objectives- Expensionary Demand Side

Answer 10

Monetary policy- Employment vs Inflation
Fiscal Policy- iInflation vs distribution of wealth
Fiscal Policy- GDP vs balance of payments

Question 11

Monetary policy

Answer 11

The maipulation of the rate of interest, the money supply and exchnage rates to influence the level of economic growth

Question 12

Multiplier equation

Answer 12

1 / (1 - MPC)

Question 13

Fiscal Policy

Answer 13

the government changing the levels of taxation and government spending in order to influence aggregate demand (AD) and the level of economic activity