Macroeconomics Flashcards
(23 cards)
Changes in real GDP are used to measure
Economic Growth
Factors of LRAS (x)
What measures are used to increase the rate of growth of productivity and reduce cyclical unemployment?
Lower taxation on firms and lower interest rates
What happens as a result of a negative output gap
Real GDP in the UK is less than the economy’s productive potential
Structural unemployment is most likely to occur because of
Long-term changes in the pattern of demand for the products of particular industries.
Example of contractionary fiscal policy (x)
A budget deficit is most likely to occur when
government spending exceeds tax revenue.
All other things being equal, an increase in the exchange rate of the pound
against other currencies due to a rise in interest rates is most likely to cause an
increase in the UK’s
level of unemployment.
Supply-side policies are…
Supply-side policies are intended to increase the long-run trend rate of economic growth
In the circular flow of income model, what is the equation
Income=Output=Expenditure
An example of an injection into the circular flow of income model
Government spending
What is not part of the role of the Monetary Policy Committee of the Bank of England?
Setting the target rate for inflation
What is likely to generate growth in an economy without producing an increase in inflation?
An increase in labour productivity
What are the objectives of UK government macroeconomic policy?
Which one of the following policy changes represents a contractionary fiscal policy?
A decrease in the budget deficit
Changes are regularly made to the weights used in the UK’s Consumer Prices
Index. This means that the index takes account of changes in
spending patterns throughout the economy.
What is likely to reduce cyclical unemployment in the UK?
Higher economic growth in the Eurozone
What is likely to improve the supply-side performance of an economy? An increase in
labour productivity.
Which one of the following indicates a contractionary monetary policy?
What indicates a contractionary monetary policy?
Appreciation of the exchange rate
A government wants to increase the economy’s rate of long-run economic growth by implementing a supply-side policy. What is a government policy aimed at stimulating the supply side of the economy?
Measures to promote competition between businesses
A government reduces its budget deficit. Other things remaining the same, a likely short-run impact of this policy is
a reduction in the current account deficit
