Macroeconomic Performance

Question 1

What is the key policy objectives ?

Answer 1

• Econ Growth
• Full employment
• Price stability (control inflation)
• Attaining a BoP

Question 2

What is economic growth?

Answer 2

Economic growth is the long-term expansion of the productive potential of the growth

Question 3

What is the free market definition of unemployment?

Answer 3

This is the no of people willing and able to work is equal to the number of workers

Question 4

Why is unemployment bad ?

Answer 4

• Leads to adverse effect on unemployment.
• Falling in living standards
• Revenue from taxes decreases

Question 5

Define price stability ?

Answer 5

Price stability is the goal of maintaining a low rate of inflation or deflation.

Question 6

What is inflation ?

Answer 6

Inflation is the decline of purchasing power of a given currency over a time

Question 7

What is deflation

Answer 7

Deflation is the decrease of prices in an economy due to contraction in supply

Question 8

What is the balance of payments (BOP) ?

Answer 8

• This is country’s transaction with the rest of the world

Question 9

What is real GDP?

Answer 9

Real GDP is the value of economic output (GDP) adjusting for inflation

Question 10

What does it mean to be ‘real’ ?

Answer 10

Adjusted for inflation

Question 11

Define PPP(Purchasing Power Parity)?

Answer 11

Purchasing power of a currency refers to the quantity of the currency needed to purchase a given unit of a good.