Macro Flashcards
Ceteris paribus
Assuming all other things are equal
PPP
The different in the absolute purchasing power of different currencies
PPP formula
x cost in currency 1/x cost in currency 2
Nominal vs real GDP
Nominal GDP is GDP (definition) at current prcies. Real GDP is GDP (definition), adjusted for inflation
Economic agents
Consumers
Producers
Governments
Expenditure
Government spending + consumer spending + business investment + (Exports - imports)
Macroeconomic objectives
- Economic growth
- Low inflation
- Low unemployment
- Satisfactory balance of payments
Economy
The system of making money and producing and distributing goods and services within a country or region
Economic growth
An increase in the production of goods and services within an economy
GDP
The total amount of final goods and services produced within a region over a set period of time - a year
GNI
The total amount of money earned by a nations people and businesses
GNP
The total amount of goods and services produced within a region over a set period of time - a year - including foreign economic production
GNH - key indicator of life quality emphasising cultural and environmental values - metrics
- Sustainble and equitable socio-economic development
- Environmental conservation
- Preservation and promotion of culture
- Good governance
Price level
The average price of goods and services in the economy
Inflation
A sustained general rise in the price level across an economy
Deflation
A sustained general fall in the price level across an economy
Disinflation
A fall in the rate of inflation
Hyperinflation
When there are large levels of inflation
Inflation case studies (japan)
1987-1990 Inflation
1991-1993 Disinflation
1999-2004 Deflation
How to measure unemployment
- Claimant count
- LFS
Why is high inflation an economic problem
- Internation inequality
- Falling real incomes
- Negative real interest rates
- Cost of borrowing
- Wage inflation
- Business uncertainty
2 winners + 2 losers of high inflation
Winners:
Debtors if real interest rates are negative
Producers if prices rise faster than costs
Losers:
Fixed pensions
Savers if real interest rates are negative
unemployed
Those people able, available, and willing to work but not in a job
working age
The population of the number of people aged 16-65
