Macro Economics

Question 1

What are the 7 government objectives

Answer 1

Reduce inequality 
Reduce debt 
Control inflation 
Decrease unemployment 
Increase growth 
Balance of payment(import vs export)
Sustainable environment

Question 2

There are three measures of output/economic growth

Answer 2

The expenditure method (all value of spending added up)
Income method (all business income added up)
Output method(value of all output produced)

Question 3

Bullet point circular flow of Income

Answer 3

• Factors of production from households to firms
• Households spend money buying products form firms so firms have profit
• inject government investments and exports
• withdraw taxes savings and imports

Question 4

Factors impacting consumer spending

Answer 4

• real income -direct and indirect taxation -interest rate
• household wealth -consumer confidence -supply of credit
• distribution of income - demographics

Question 5

Define total income
Disposable income
Discretionary income

Answer 5

Gross income
Amount after tax + national insurance
Amount after bills

Question 6

Factors effecting investment

Answer 6

• interest rate -economic growth -confidence - inflation
• taxation -profitability -productivity of capital - wage costs
• depreciation - government policy’s - availability’s to finance
• cost - risks