Macro 3.2.1 TIGER, indicators and index numbers

Question 1

what does the TIGER anagram stand for

Answer 1

T = trade
I = inflation
G = growth
E = employment
R = rest

Question 2

define primary and secondary income tax

Answer 2

primary income - the net flow of profits, interest and dividends from investments in other countries and net remittance flows from migrant workers

secondary income - the redistribution of income through current transfers, by governments, multinational organisations or charities

Question 3

define demand pull inflation

Answer 3

when price levels increase due to an increase in demand in the economy

Question 4

define cost pull inflation

Answer 4

when the price levels increase due to an increase in the costs of businesses. Caused by increase in commodity prices, change in exchange rates, or price shocks in other countries

Question 5

2 ways inflation is commonly measured

Answer 5

CPI: consumer price index
RPI: retail price index

Question 6

short and long run economic growth diagrams and the names of the 3 diagrams

Answer 6

classical, keynesian, PPF

Question 7

what are the different types of unemployment

Answer 7

Vocational - mistmach of workers skills and jobs available in the market
Seasonal - people are out of work during certain time of the year as demand drops
Frictional - workers are searching for new jobs or are transitioning from one job to another
Structural - immobility of labour due to a long term change in the structure of an industry (occupational or geographical)
Trade union / traditional - when trade unions push wages above equilibrium level so a reduction in demand for labour
Cyclical - occurs due to a reccession in the economy

Very Silly Fools Such Their Chips

Question 8

3 policies for short run and long run economic growth

Answer 8

Long run:
1. investment in public transport
2. investment in education
3. investment in infrastructure

Short run:
1. expansionary fiscal policy (increase government spedning or cut tax)
2. expansionary monetary policy (lower interest rates)
3. increase in wages

Question 9

what are the pros and cons of unemployment

Answer 9

pros - greater pool of workers for firms, low inflation, impressed current account position, time for worker to find suitable job

cons - lost output, deterioration of gov finance, social costs, cost to other countries, lost income, hysteresis

Question 10

define budget deficit and surplus

Answer 10

budget deficit - government spends more than revenue they receive

budget surplus - government revenue exceeds expenditure

Question 11

define direct and indirect tax

Answer 11

direct tax - paid directly to the government, a tax levied on income and wealth. Cannot be passed onto someone else

indirect tax - a tax levied on spending, it can be passed onto someone else

Question 12

name the different types of taxes

Answer 12

1. income tax - money taken from personal income, direct
2. national insurance tax - used to fund benefits and the NHS, direct
3. corporation tax - take money from your company, indirect
4. inheritance tax - tax on estate of someone who has died, indirect
5. VAT - added to most product and services, indriect
6. excise tax - sales of demerit goods, indirect
7. carbon border tax - tariff placed on imports based on percentage of carbon, indirect

Question 13

what does it mean if a tax is regressive

Answer 13

a tax imposed by the government which takes a higher percentage of someones income than those on low income

Question 14

define macroeconomics indicator

Answer 14

data which is commonly used to measure performance of an economy such as: real GDP, real GDP per capita, consumer price and retail price indices, measures of unemployment, productivity and the balance of payments on the current account

Question 15

define positive and negative animal spirits

Answer 15

positive animal spirit - when the economy is performing well, people feel better off, therefore people feel good and economic activity increases

negative animal spirit - when economy is performing bad, people feel worse, therefore people are negative and economic activity decreases

Question 16

what are the 3 types of economic indicators

Answer 16

leading indicators - yield curve, consumer durables, net business formations, and share prices, are used to predict the future movements of an economy. investors most interested in these at can predict the future accurately

coincident indicators - GDP, employment levels, and retail sales, are seen with the occurrence of specific economic activities.

lagging indicators - gross national product (GNP), CPI, unemployment rates, and interest rates, are only seen after a specific economic activity occurs.

Question 17

define index numbers

Answer 17

they are used to calculate changes in the economic indicators such as GDP and inflation

Question 18

index number calculation

Answer 18

(actual figure in selected year / actual figure in base year) x 100

percentage point change