Macro 1.6 Flashcards
What is a policy objective?
A target or goal that the policy makers aim to achieve
What is a policy instrument ?
A tool that government uses to achieve government policies
What is a policy indicator?
Statistical data used to measure the performance of government policies and gives information on policy performance
What is short-run economic growth?
It is the growth of real output resulting from using idle resources, including labour, thereby taking up the slack in the economy
What is long-run economic growth?
It is an increase in the economy’s potential level of real output, and an outward’s shift of the economy’s production possibility frontier
What is a gross domestic product (GDP)?
the sum of all goods and services produced in the economy over a period of time
What is real GDP?
A measure of goods and services produced in an economy removing price changes and inflation
What is nominal GDP?
GDP measured at the current market prices, without removing the effects of inflation
What is the definition of being unemployed?
Being willing and able to work but are unable to find employment despite an active search
What is the definition of full employment?
When there is less than 3% of the work force unemployed
What is inflation?
the continuing rise in the average price level
What is deflation?
a continuing fall in the average price level
What is disinflation?
when the rate of inflation is falling but still in the positive
What is the price index?
An index number showing the extent to which a price has changed over a month, quarter or year in comparison to the base year
What is the consumer price index (CPI)?
The official measure used to calculate the rate of consumer price inflation in the UK
What is the retail price index (RPI)?
The old measure used to calculate the rate of consumer price inflation in the UK
What is the balance of payments?
A record of all the currency flows into and out of a country in a particular time period
What is the current account of the balance of payments?
It measures all of the currency flows into and out of a country in a particular time period in payment for imports and exports together with income and transfer flows
What are exports?
Domestically produced goods or services sold to residents of other countries
What are imports?
goods or services produced in other countries and sold to residents of this country
What is the balance of trade?
The difference between the money value of a countries imports and exports.
What is a balance of trade deficit?
the money value of a county’s imports exceeds the money value of its exports
What is a balance of trade surplus?
the money value of a country’s exports exceeds the money value of its imports
What is a balanced budget?
when government spending equals government revenue
