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Economics > MACRO - Unit 6 > Flashcards

MACRO - Unit 6 Flashcards

1
Q

What are macroeconomic objectives?

A

are the goals a government wants to achieve for the whole economy

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2
Q

What are the 6 macroeconomic objectives?

A
  1. economic growth
  2. unemployment
  3. inflation
  4. balance of payments
  5. balancing budget
  6. equitable distribution of income
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3
Q

What is economic growth?

A

measures the rate of change of a country’s output

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4
Q

What is the measure of economic growth?

A

Gross domestic product (GDP)

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5
Q

What does GDP calculate?

A

the sum of country’s output in 1 year

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6
Q

What are 3 key benefits of economic growth?

A
  • job creation
  • rising incomes
  • improved standards of living
  • improved confidence of consumer spending and business investment
  • lower government spending on job seeker allowance and benefits
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7
Q

Why is unemployment important?

A

problem as it represents waste of resources

high unemployment is usually an indicator of poor economic performance

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8
Q

What are the benefits of low unemployment?

A
  • higher consumption and aggregate of demand
  • higher income
  • improved standards of living
  • higher taxes for government
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9
Q

What is inflation?

A

the rate of change of average prices in an economy

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10
Q

What is the measurement for inflation?

A

CPI

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11
Q

Why is inflation important?

A

it affects the the value of £’s in your pocket

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12
Q

What does balance of payments measure?

A

measure the UK’s record of economic activities with other countries

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13
Q

What is balance of payments to do with?

A

exports and imports

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14
Q

What happens if exports > imports

A

surplus

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15
Q

What happens if imports > exports

A

deficit

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16
Q

What is the distribution of income?

A

how evenly incomes are shared between individuals and households across the economy

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17
Q

What does achieving equitable distribution of income mean?

A

government would like to ensure the gap between richest and poorest does not become excessive wide

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18
Q

What are the macroeconomic indicators?

A 
GDP
real GDP 
real GDP per capita 
consumer and retail price indices (CPI/ RPI)
unemployment 
balance of payment
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19
Q

What is GDP a measure of?

A

national income of an economy. Based on the values of all incomes earned in a economy over a period of time.

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20
Q

What does real GDP measure?

A

measures the value of GDP after removing the effect of price changes from its value.

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21
Q

When is real GDP used?

A

in comparisons between countries in terms of standard of living

22
Q

How is real GDP per capita calculated?

A

real GDP / population level measured in monetary terms

23
Q

What is unemployment usually measured in?

A

level or rate by Labour force survey or Claimant Count

24
Q

What is used to measure balance of payments?

A

measured in term of net exports

25
Q

What is the economic cycle diagram?

A

model that demonstrates the cyclical pattern of GDP as it fluctuates around the trend growth rate

26
Q

How is a positive output gap created?

A

when the economy temporarily grows faster than the trend rate

27
Q

How is a negative output gap created?

A

occurs when the aggregate demand is growing at a slower rate, or falling

28
Q

What is CPI and RPI?

A

the rate of change of the average price level over time

29
Q

What is the difference between CPI and RPI?

A

RPI includes housing costs

30
Q

What is the basket of goods and services?

A

used in compiling the various measures of consumers price inflation are reviewed each year

31
Q

What is the Claimant Count ?

A

includes the number of people receiving welfare benefits for being unemployed. Usually jobseekers allowance

32
Q

What is Labour Force Survey?

A

based on a monthly sample of people, it records those who report they are looking for work but cannot find it, regardless whether they claim benefits or not.Used to work out the national unemployment level.

33
Q

How do you calculate unemployment?

A

number of people unemployed/ size of labour force X 100

34
Q

What are the 6 types of unemployment?

A 
frictional
structural
cyclical
seasonal
technological
regional
35
Q

What are the causes for unemployment?

A

lack of aggregate of demand
labour immobility
unemployment trap

36
Q

What are the possible remedies for unemployment?

A

expansionary fiscal and monetary policies

supply side policies

37
Q

What causes cyclical unemployment?

A

persistent lack of aggregate of demand for goods and services, where national output < potential output, causes a negative output gap

38
Q

What causes structural unemployment?

A

by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers

39
Q

What is frictional unemployment?

A

is the number of people classed as unemployed while they are moving between jobs

40
Q

What is seasonal unemployment?

A

workers left without jobs because of the time of year, where there are seasonal changes in employment e.g fruit pickers

41
Q

What is technological unemployment?

A

is the loss of jobs due to technological changes

42
Q

What is regional unemployment?

A

loss of jobs due to decrease in industrial activities e.g steel production

43
Q

What are the 3 types of productively?

A

labour productivity
capital productivity
factor productivity

44
Q

What is the current account?

A

primarily records the trade in goods

45
Q

What is the capital account?

A

primarily records international flows of capital e.g

inter-country loans or government investments overseas

46
Q

What is the financial account?

A

primarily records net Foreign Direct Investment

includes government owned assets

47
Q

What is the base period?

A

what an index starts on, ALWAYS 100 which is the base year or base number

48
Q

What does an index measure?

A

measures the change in a representative group of data

49
Q

What is the calculation to work out index number?

A

current price / base year price X 100

50
Q

What is a chain base index number?

A

base index number for last year

Economics (9 decks)

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