Reminders For Year 1

Question 1

What is the multiplier effect?

Answer 1

When a change in the components of AD

leads to a greater change in the national output

Question 2

What is the formula for multiplier effect?

Answer 2

1 / 1 - MPC

Question 3

What are the measures for unemployment

Answer 3

labour force survey (only done with a sample, not a census, overestimate)

Claimant count rate (only counts those eligible to jobseeker’s benefits, e.g recent graduates, underestimate)

Question 4

What is PPP?

Answer 4

Purchasing power parity
Measures the purchasing power compared to other countries