Macroeconomy Flashcards
What is the definition for Macroeconomics?
Economics at a larger scale
You learn about levels of output, employment and prices in the economy
Equation of Aggregate Demand?
AD=C+I+G+(X-M)
Definition of Aggregate Demand?
Total spending on goods and services produced in the economy
GDP?
Measures the Value of Output produced within a country over a 12 month period
What are the three ways of measuring GDP?
Product Method
Income METHOD
Expenditure Method
Why is GDP not the same as the incomes earned by domestic residents?
Some incomes generated in the domestic economy are earned by foreign residents and sent abroad
Some incomes generated abroa are earned by domestic residents and are brought into the country
Advantages of using GDP?
Allows comparisons of the size of economies between countries
What is the definition of GDP per Capita?
GDP/Populatin
Limitations of comparing GDP per Capita figures
GDP does not measure unpaid activities
Mean incomes can hide big difference in income inequalities between countries
Why does economic growth occur
There is an increase in the size of the working population —> This increases AD –> Increases GDP –> Increases EG
Investment in Capital Goods
Natural Resources
Technology
Definition of economic growth
economic growth means increase in real GDP
Three Kinds of Output?
See
Diagram of Economic Growth
See
Why do the UK government want to achieve stable and sustainable economic Growth?
It leads to improvements in productivity
Rising living standards, fall in relative poverty
How do the UK government achieve steady EG?
Supply Side Policies and Demand Side Policies
