Macro 1/6 1st year

Question 1

what is the circular flow of income

Answer 1

exchange of money between firms and households

Question 2

what is RPI

Answer 2

Retail price index (CPI that includes housing costs)

Question 3

what is CPI?

Answer 3

consumer price index- takes goods and collects prices to take an average

Question 4

what is gdp per capita

Answer 4

total gdp/population

Question 5

what problems are caused by high levels of unemployment

Answer 5

1. less tax money
2. less economic growth
3. less workers

Question 6

why is unemployment negatively correlated with economic growth

Answer 6

less unemployment leads to increased output (productivity) = more gdp

Question 7

define economically inactive

Answer 7

those who r neither employed or unemployed- not actively searching for employment

Question 8

how do we use real gdp to measure economic growth

Answer 8

compare it to the most recent quarter

Question 9

what is the basket of goods

Answer 9

average products bough in a household

Question 10

why do we want inflation to stay low and steady

Answer 10

so the purchasing power of money doesn’t decrease

Question 11

4 criteria for a person to be named unemployed

Answer 11

1. willing to work 2. over 16 3. under 65 4. able to work in the next two weeks 5. not already employed (education)

Question 12

definition of a depression

Answer 12

a severe recession

Question 13

definition of real gdp

Answer 13

gdp adjusted for inflation

Question 14

definition of recession

Answer 14

when 2 successive quarters show a decrease in gdp

Question 15

definition of gdp

Answer 15

the value of all final goods and services produced within a country’s border

Question 16

what are the three main objectives

Answer 16

economic growth, low inflation, low unemployment rates and high net exports-imports

Question 17

what are index numbers and what do they measure

Answer 17

convert the value of a variable into a format that allows us to compare data easier

Question 18

what is an open economy

Answer 18

income can both be injected in to and leak out of an economy over time

Question 19

define economic activity

Answer 19

production, distribution and consumption of goods and services

Question 20

what are examples of weighted index numbers and what do they measure for

Answer 20

CPI and RPI. CPI measures inflation

Question 21

how might leakages come back as injections

Answer 21

buying and selling goods to other countries

Question 22

how do we achieve economic growth

Answer 22

by increasing economic capacity to produced goods and services

Question 23

define inflation

Answer 23

a sustained increase in general price level in an economy over a period of time

Question 24

factors of production and their rewards

Answer 24

land (rent) capital (interest) labour (wages) entrepreneur (profit)

Question 25

what are factors of production

Answer 25

inputs used in the production procss

Question 26

what are economic policies

Answer 26

actions taken by government to influence economic performance

Question 27

what is the claimant count

Answer 27

the number receiving unemployment benefits

Question 28

what is a closed economy

Answer 28

income that circulates only within the economy

Question 29

what are injections from the circular flow?

Answer 29

gov spending, investments, exports

Question 30

what are leakages from the circular flow

Answer 30

taxes, savings, imports