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Political Economy > Macroeconomy > Flashcards

Flashcards in Macroeconomy Deck (37):
1

This is the study of the 'whole' economy meaning this encompasses...

aggregate demand and aggregate supply

2

Aggregate demand in the economy = spending by ... + ....

households + injections

3

Injections are comprised of ... (3)

Investment, government expenditure and foreign demand for UK goods

4

Government has 4 aims for the economy as a whole ...

Economic growth NO1
Low Inflation NO2
Low Unemployment NO3
Trade Balance NO4

5

NO. 1 Gov tries to increase ... ... long term

economic growth

6

NO. 1 ... output = higher ...

higher, incomes

7

NO. 1 The whole point of economic growth is to...

Raise the standard of living

8

NO. 1 Actual growth is the increase in national ... from one ... to the next

output, period

9

NO. 1 Potential growth is the speed at which the economy could grow if all ... are ....

resources are employed

10

NO. 1 If ... growth is lower than ... growth we would see unemployment and spare capacity

actual, potential

11

NO. 1 During a recession the economy is below the ... and ... is falling

potential, output

12

NO. 1 IN the long term Gov wants to increase ... output

potential

13

NO. 1 Long term growth underpinned by 2 dimensions...

increase in resource sand efficiency

14

NO. 1 resources comes from...

natural resources, labour and capital

15

NO. 1 An increase in the efficiency with which these resources are used, through advances in ..., improved ... skills or improved ...

technology
labour
organisation

16

NO. 1 For the UK high growth is ...-...%

3-4

17

NO. 1 China and India can grow much faster as they are ...

LEDC's

18

NO.2 Inflation is the ... rise in ... over the last ...

average
prices
year

19

NO.2Although prices are ... ...

generally
rising

20

NO.2Price rises are measured by the...

CPI / Consumer Price index

21

NO.2The basket of goods=

collection of food and services used to calculate CPI

22

NO.2... goods and services in ... today there are ....

150,1947,700

23

NO.2Bread prices have increased .....%

1300

24

NO.2Problems with above average inflation (3)

Reduces the country's competitiveness
Reduces the value of savings
Affects certain groups more than others: people on fixed incomes, pensions and savers

25

NO.3 when did UK experience full employment?

50s and 60s

26

NO.3 Since then we have seen higher unemployment rates due to ...

industrial decline; major recessions; welfare dependency; social exclusion)

27

NO.3 Reasons Unemployment is a problem...

Effects living standards of employed and their families

It is a waste of resources

Drain of state resources

Social exclusion and social disorder

28

NO.4 Trade Surplus is...

Exports higher than imports

29

NO.4 Trade Deficit is.....

Imports higher than exports

30

NO.4If a country has a large trade deficit it is...

uncompetitive

31

NO.4 a large trade deficit could lead to...

currency devaluations and debt

32

No.4 a large trade deficit could also lead to

falls in living standards and dependence of foreign creditors

33

NO.4 Secondary objectives of the government are

Lower taxes
Lower national debt

34

NO.4 What are the two tools with which the government can affect the whole economy?

Monetary policy and Fiscal policy

35

NO.4 Monetary policy is: the government controlling....

the value of money through interest rates and the currency

36

NO.4 another method used in monetary policy is...

Quantitative easing

37

Fiscal policy: ...

The Government controls taxes, spending and the public debt
spending influences the economy.