Macroeconomics Igcse

Question 1

factors of economic growth( limpdu)

Answer 1

increase in life expectancy
increase in infrastructure
increase in productivity
decrease in unemployment 
increase in migration.

Question 2

what is economic growth

Answer 2

is the increase in the value of goods and services produced within an economy over a period of time

Question 3

GDP?

Answer 3

gross domestic product measures the total no of goods and services produced with an economy over a period of time

Question 4

problem of GDP

Answer 4

statistical errors and the hidden economy

Question 5

inflation

Answer 5

is the avg increase in the price of goods and services being sold within an economy over a period of time

Question 6

demand-pull inflation

Answer 6

demand rises for goods and services from consumers, firms, govs

firms will exploit the rising demand by increasing there prices for their goods and services, as a firm’s main objective is to maximize a profit

Question 7

cost-push inflation

Answer 7

resources become expensive

cost of producing increases

thus the business will produce less and pass the rising cost to their consumers

Question 8

intrest rates

Answer 8

The reward for saving and cost for borrowing

Question 9

what is unemployment

Answer 9

people who are actively seeking for a job and are currently without a job

Question 10

Types of unemployment

Answer 10

fssc

frictional/ sessonal/ structural/cyclical

Question 11

cyclical unemployment

Answer 11

unemployment caused when there is a decline in the economic cycle such as a downturn or recession

Question 12

frictional unemployment

Answer 12

short term unemployment caused when people are between jobs

Question 13

structural unemployment

Answer 13

unemployment caused when theyre is a decline within an industry, such as robots replacing humans, (factor substitution)

Question 14

seasonal unemployment

Answer 14

unemployment due to changes in seasonal demands for goods and services

Ex) such as agricultural goods

Question 15

Balance of payments

Answer 15

A record of all transactions including international trade

Question 16

Current accounts

Answer 16

section of the balance of payments where it records the amount of imports and exports for an individual country

Question 17

Exports

Answer 17

when goods and services are sold overseas

Question 18

imports

Answer 18

when goods and services are brought from overseas

Question 19

current account surplus

Answer 19

exports > imports x>m good

Question 20

current account deficit

Answer 20

imports > exports m

Question 21

exchange rates

Answer 21

the price of one currency in terms of another

Question 22

SPICEE bad

Answer 22

Stronger pound - imports cheaper - exports expensive

Question 23

wpidec good

Answer 23

Weaker pound - imports decrease - exports cheaper

Question 24

Ways businesses damage the environment

Answer 24

Water pollution
visual pollution
Air pollution
noise pollution

Question 25

Gov intervention (Mm strips)

Answer 25

Maximum pricing - A maximum price occurs when a government sets a limit on the prices of a good or service – with the aim of reducing prices (the government sets a maximum price to allow consumers to purchase these day to day products such as water, rice, etc) Minimum pricing - A minimum price is set so that firms cannot sell below a certain price. (this is done to prevent people from buying dermit goods) Subsidies - money that is given by the gov to lower prices, reduce the cost of producing goods and therefore increase the supply of goods and services Taxation - taxing products increasing prices and lowering demand Regulation - fines/ rules Information - info (advertisement to prevent bad habits) Pollution permits - to reduce pollution via permits State provision - free gov services like parks, schools.

Question 26

Absolute poverty

Answer 26

is someone who cannot afford the basic needs

Question 27

relative poverty

Answer 27

is someone who can afford the basic needs but can be | classified as poor compared to his surroundings

Question 28

Income inequality

Answer 28

Is the difference that exits within the people's income that determines whether they're rich or poor

Question 29

Government interventions to reduce poverty and income inequality, Stae the three ways (pri)

Answer 29

3 ways: progressive taxation: the more you earn/ make, the more you pay redistribution through benefits of payments: the government collects taxes through progressive taxation to redistribute it equally amongst its people, as the government main objective is to maximize standards for their citizens invest in healthcare and education: to provide basic needs to everyone and prevent absolute poverty

Question 30

how do governments redistribute income amongst its citizens

Answer 30

by spending it on unemployment, housing, disability allowance, and welfare benefits, as the government main objective is to maximize living standards for its citizens

Question 31

government policies that affect demand

Answer 31

Fiscal policy | Monetary policy

Question 32

what is fiscal policy to do with?

Answer 32

government spending and taxations

Question 33

Budget surplus

Answer 33

when taxation is greater than government spending

Question 34

Budget deficit

Answer 34

when government spending is greater than taxation

Question 35

negatives of a budget deficit

Answer 35

Cost increases: increasing in borrowing increase in national debt pay interest opp.cost ( Ziad, bishr, haram, opp cost)

Question 36

2 types of taxes

Answer 36

Direct and indirect tax

Question 37

What is direct tax

Answer 37

Direct tax, are taxes imposed on firms and individuals | depending on their income, profit levels and wealth

Question 38

2 types of direct tax

Answer 38

income tax - tax depending on a person's income co-operation tax - taxes depending on a firms profit they are usually charged a specific amount

Question 39

indirect tax

Answer 39

indirect tax, any tax on spendings is called an indirect tax VAT/GSC business rates Duities council tax

Question 40

why do governments impose taxes

Answer 40

discourage people from buying harmful goods pay for public services to protect the environment

Question 41

2 types of fiscal policy (Expans and contract)

Answer 41

expansionary, (increasing the aggerate demand) | contractionary(reducing the aggerate demand)

Question 42

what is Expansionary fiscal policy

Answer 42

Expansionary fiscal policy is related to Budget deficit, where goverment spending is more than taxation

Question 43

expansionary effects on consumers and firms (ad increases, left )

Answer 43

A decrease in tax --> consumers have more disposable income --> ad rises a decrease in cooperation tax --> firms have more money to spend on r&ds, better quality products --> ad rises Increase in gov spending --> more spending on infrastructure (increase in productivity), subsidies --> ad rises

Question 44

Contractionary fiscal policy effects on consumers and frims( ad decreases, right)

Answer 44

An increase in tax --> consumers have less disposable income --> ad decreases an increase in cooperation tax --> firms have less money to spend on their businesses, business cost increases--> ad decreases a decrease in gov spending --> less spending on infrastructure (decrease in productivity), decreasing subsidies --> ad decreases

Question 45

why goverments use Contractionary fiscal policy (ipm) Budget surplus

Answer 45

to reduce inflation to reduce pollution to eliminate market failure

Question 46

why goverments use Expansionary fiscal policy (eug) budget deficit

Answer 46

to increase economic growth to reduce unemployment to increase GDP

Question 47

what is Contractionary fiscal policy

Answer 47

Contractionary fiscal policy is related to budget surplus where taxation is greater than government spending

Question 48

what does budget surplus relate to? expansionary contractionary

Answer 48

contractionary

Question 49

what does budget deficit relate to? expansionary contractionary

Answer 49

expansionary

Question 50

2 types of monetary policies

Answer 50

increasing the supply of money | changing interest rates to control inflation

Question 51

monetary policy (changing interest rates to control inflation) green left

Answer 51

inflation increases above 2 % central banks will increase interest rates consumers will spend less and save more demand for goods and services decreases firms profit decrease firms will have lower prices in response to the demand Inflation falls back to 2 %

Question 52

increasing the supply of money

Answer 52

Central banks will buy bonds from commercial banks Commercial banks will receive money in exchange for the bonds Commercial banks will have more money to spend on the consumers and firms As a result consumers and firms have more money entering the economy more money enters the economy improving, GDP, economic growth, reducing unemployment

Question 53

why are supply-side policies used

Answer 53

policies that are used to increase aggregate supply within an economy

Question 54

aggerate supply

Answer 54

the total no of good and services produced by all firms within an economy

Question 55

how are supply-side policies used (increase)

Answer 55

supply-side policies are policies that increase the quantity or quality of the factors of production factors of production (land, labor, capital, and enterprise)

Question 56

supply-side policies (pet-tax)

Answer 56

privatization ( increases the quality of workers) Spend more on education and training ( increases supply of workers) lower income tax to encourage workers (Quantity) lower business tax to encourage employment (Quantity)

Question 57

improving labor productivity (Wtfq)

Answer 57

improving flexibility- (new laws to weaken trade unions) lowering taxes increase workload- (raise the retirement age and encourage immigration) improving labor quality