General concepts Flashcards
definition Macroeconomics
studies the aggregate behaviour and performance of an economy
Economic agents
consumers, companies, government and foreign country
Definition Macroeconomic equilibrium
equilibrium on all markets
define ‘all markets’
- goods market
- labour market
- money market
- financial market
Definition Gross Domestic Product
Total value of all final goods and services within a specific period in a specific area
Is GDP a perfect indicator of well-being? and why?
No, because is does not capture things such as income inequality, human rights, gender inequality, environment. Plus it remains an average
define a budgetary policy
Taxes and expenses of a country which influences demand. (taxes or government spending)
define a monetary policy
CB strives for price stability through for example the monetary base
what does an exchange rate policy?
stabilise exchange rate with the interest rate
what shows GDP in the long run
GDP shows an upward/increasing trend over time. Income and living standard increase as well
What shows GDP in the short run
GDP shows business cycles of various lengths and magnitudes with booms and recessions
Formula GDP growth rate
(Yt - Yt-1) - 1
Formula %Y growth
(Ln Yt - Ln Yt-1) * 100
Formula Long run growth
= average growth
= ((Ln Yt - Ln Yt-1) / (T-1) ) * 100
Formula difference short run % current y and trend y
(Ln Yt - Ln Ttrend,t) * 100
Factors of distribution
labour and capital
define hyperinflation
if average price increases with more than 50%
is inflation procyclical or anticyclical ?
Procyclical
real economy
production and consumption of goods and services
how can Financial markets influence the real economy?
- Investments by companies
- Financial markets depend on consumption
Formula Economic Openness
(Export + Import) / GDP
Is GDP Procyclical or anticyclical?
Procyclical
what does a Burns-Mitchell Diagram?
show if a variable is procyclical or anticyclical
Leading variable
can be used to predict (unemployemnt)
