Exonomic Factors Flashcards
GDP
The total value of output produced in an economy
Economic growth
The annual percentage change in GDP
If GDP goes down, it means
The economy is shrinking
An impact of a decrease in GDP is
Job cuts
House prices falling
If GDP is rising, it means
The economy is expanding
Ways to increase GDP (what the government can do)
Encourage investment in physical capital by offering subsidies or lowering taxation
Improve infrastructure
Improve quality of human capital by investing in education
Standard of living
The amount of goods and services a person can buy with their income in a year
Limitations of standard of living
It’s only an average- distorted by those with more money
Inflation
Persistent general tendency of prices in the economy to rise
CPI
A measure that examines the weighted average of prices of a basket if so summer goods/ services
Exchange rate
The value of one currency in terms of another
Hot money
Money that flows from country to country in search for the highest rate of interest, of no incentive to save in the uk banks, it causes a lower demand for the pound, causing the value to decrease
Foreign investment
Foreign business wishing to build a factory or office in a country will have to use its currency to demand pounds in order to pay the Countries construction companies
Interest rates
Cost of borrowing and reward for saving expressed as a percentage
Unemployment
A situation in which people who are able and willing to find work are not able to find employment
