Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

A-Level Macroeconomics > Sept - Feb Macroeconomics > Flashcards

Sept - Feb Macroeconomics Flashcards

1
Q

What is economy structure?

A

The structure of an economy comprises of the different types of economic activity that the economy undertakes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Describe the economic structure of a developing country?

A

Typically have a high share of primary sector employment, as they begin to develop further then more employment is created in the secondary industries.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is economic growth?

A

An increase in the long run productive capacity of an economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is economic development?

A

The process that seeks to improve the economic well being and quality of life for a country.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Name some themes of economic development?

A

Higher living standards

Improved availability of basic needs

Expansion in opportunities for education and enhanced healthcare.

Improve resource allocation and sustainability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does GDP per capita as a measure of economic development fail to address?

A

The extent of income distribution

Resource depletion

Pace and scale of pollution

Quality of life measures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the ‘better’ measure of Economic development?

A

Hdi

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is sustainable development?

A

People being able to satisfy their needs for today and improving their sta date of living without impacting on future generations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How could we obtain sustainable development?

A

If we invest in capital goods today, then we can enjoy greater prosperity in the future. And increase in capital good will increase the PPF outwards, expanding productivity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What factors are required for both economic growth and economic development?

A

Investment

Education

Training of workers

Health improvements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the barriers to economic growth and development?

A

Corruption

Institutional factors - inefficient handling of finances

Poor infrastructure - difficult for business to access markets

Inadequate human capital - skill of workforce lacking

Lack of property rights - no incentive to trade innovate or develop

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the 3 criteria measured for HDI?

A

Life expectancy at birth

Mean years of schooling

GDP per Capita

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Advantages of HDI?

A

Takes into account well being of country

Used fairly reliable data

Can identify successful government policy, particularly supply side policy like education.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Limitations / disadvantages of HDI?

A

Fails to take into account qualities be factors like political freedom.

Does not take into account income inequality in a country

Does not look at poverty or deprivation within a country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is income?

A

A flow of money coming from the 4 factors of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is wealth?

A

A stock concept. Can be held in different ways

Eg savings
Ownership of shares
Ownership of property
Bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Where is the poverty line in the UK?

A

On or below 60% of the median income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What does the Lorenz curve describe?

A

Income distribution through the population.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What does the straight line at a 45 degree angle on a Lorenz curve mean?

A

Perfect equality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What does it mean if a curve bows further away from the 45 degree line?

A

There is more income inequality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Why is the Lorenz curve bad?

A

Cannot compare a wide range of countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Why do some governments redistribute income?

A

Fairness

Inequality negatively affects AD

Negatively impacts LRAS - poor may not go to school in the long term this negatively impacts human capital

Negatively impacts SRAS - employees would be trapped in low wage cycle

Negatively impacts economic development - low pay contributes to ill health etc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is absolute poverty?

A

Difficulty subsisting, below the subsistence level. World banks defines it as living on less than $1.90 per day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Conditions of absolute poverty?

A 
Lack of food
Lack of safe drinking water
Lack of sanitation facilities
Lack of proper access to healthcare
Lack of shelter, education and information.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is relative poverty?

A

Defined in relation to the overall distribution of income or consumption in a country.

In UK it’s set as 60% or below of the median income after taxes and benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Compare relative poverty with absolute poverty?

A

Relative poverty the inability to reach the minimum accepted standard of living in a particular society.
Absolute poverty could include the inability to live.

Relative poverty you have no luxuries, in absolute poverty, you cannot afford necessities.

Absolute poverty refers to a set condition anywhere in the world, where’s relative poverty refers to conditions which are subjective to the society that the person lives in.

27
Q

What are the general causes of poverty?

A

National debt

Vulnerability to natural disasters

War and political instability

History

Discrimination and social inequality

28
Q

Causes of relative poverty?

A

Inequalities in wage and earnings growth

Inheritance

High levels of structural and long term unemployment

Falling relative value of state benefits

Regressive taxes- higher tax burden in poor than there was previously

29
Q

What are the consequences of poverty?

A

Malnutrition

Poor health

Poor quality education - unable to attend etc, can’t afford materials / clothing

30
Q

Direct impact of poverty on the economy?

A

Directly impacts employment rates in the economy, without education it’s very difficult to get a job. Hinders economy from developing into strong economic system.

31
Q

Indirect effect of poverty in the economy?

A

Poverty can lead to homelessness which means more people on the streets.

Also more crime where there’s less employment and social unrest may take places

Theft to survive

Negative perceptions of place etc

32
Q

Causes of inequality?

A

Education - quality or status of schooling.

Lack of mobility in labour market - highly skilled workers eg doctors paid more than cashiers

Wealth and inheritance - many households can use their wealth to generate more and varied sources of income, those lacking wealth cannot do this.

Age - as you get older, earning potential decreases

Skill set

33
Q

Why is there income inequality between countries?

A

Differing educational standards
Ownership of wealth and assets
Demographic reasons
Lack of employment mobility.

34
Q

Causes of wealth inequality in UK?

A

Pension inequality

Property prices

Ability to save

Increased income inequality

Regional factors.

35
Q

Reasons for wealth inequality across the world?

A

Same as UK factors

Natural factors eg oil = higher wealth

Political factors eg stable gov = more investment

Culture

Ownership of assets

36
Q

Consequences of inequality?

A

Crates economic instability

Reduces rates of economic growth

Harms educational standards

Inequality linked to poor health

37
Q

Why is inequality between countries bad?

A

Helps to exacerbate inequalities within countries

Leads to mass migration as those in developing countries seek to move elsewhere

Can lead to exploitation

38
Q

What does globalisation affect?

A 
The economy
Politics 
Society
Culture
Environment
39
Q

Consequences of globalisation?.

A

Greater trade if goods and services

Greater transfer of financial capital and greater FDI

Greater transfer of technology and information between world economies

Greater labour migration within and between economies.

Development of global brands

Inclusion of more economies into the global trading system.

Greater specialisation in production

40
Q

Possible causes of globalisation?

A

Improved transport

Containerisation

Improved technology

Growth of MNCs

Reduced trade barriers

Growth of trading blocs

Improved mobility of labour

Improved mobility of capital

41
Q

What is protectionism?

A

Countries opting to impose restrictions on foreign imports

42
Q

What are the main methods of protectionism?

A

Tariffs

Quotas

Intellectual property laws

Exports subsidies

Domestic subsidies

Import licensing

43
Q

What is a tariff?

A

A tax or duty that raises the price of imported products

44
Q

What is a quota?

A

Volume limits on the level of imports that are allowed into a country in an given time period

45
Q

What are intellectual property laws?

A

Technical barriers to trade including product labelling laws eg patents and copyright protection

46
Q

What are export subsidies?

A

Payments to encourage domestic production by lowering their costs

47
Q

What are domestic subsidies?

A

Government help for domestic businesses facing financial problems

48
Q

What is import licensing?

A

Government grants importers the license to import goods

49
Q

Why is the imposition of a tariff negative?

A

Loss to consumers is greater than the benefits to producers and government combined.

50
Q

Who are the winners from tariffs?

A

Government Gains tax revenue

Domestic producers can sell a higher quantity to the domestic market, increasing supply from Q1 to Q4 leads to increase in producer surplus

51
Q

Who loses out from a tariff?

A

Domestic consumers who now pay p2 therefore decreasing consumer surplus.

Foreign exporting firms - exports fall from q2q1 to q3q4

Net welfare loss of X and Y

52
Q

What is economic integration?

A

An agreement between counties in a geographic region to reduce and ultimately remove tariff and non tariff barriers to allow the free flow of goods or services and factors of production among the members.

53
Q

What are the stages of integration?

A

Free trade area

Customs union

Single market

Monetary and economic unions

54
Q

What is a free trade area?

A

No tariffs between member countries

Eg NAFTA

55
Q

What is a customs union?

A

Free trade area with a common external tariff

Eg all agree same restriction in Chinese / Thai imports

56
Q

What is a single market?

A

Composed of a customs union, free movement of goods , services, capital and labour between members

Eg EU single market.

57
Q

What is an economic and monetary union?

A

Where two or more states share a currency
Eg Eurozone

Share at least 1 fiscal policy and 1 monetary policy

58
Q

What is the opposite of protectionism?

A

Trade creation

59
Q

What is trade creation?

A

Refers to the increase in economic welfare from joining a free trade area such as the customs union. Trade creation will occur when there is a reduction in tariff barriers leading to lower prices.

Increased consumer surplus and economic welfare

More foreign trade created with members of customs union

60
Q

Who are the winners of trade creation?

A

The net gain seen in areas 2 and 4

61
Q

Who are the losers of trade creation?

A

Government as they lose tax revenue

Domestic producers and imports become cheaper and provide more choice

62
Q

What is trade diversion?

A

Occurs when tariff agreements cause imports to shift from low cost countries to higher cost countries.

Considered undesirable because it concentrates production in countries with a higher opportunity it’s cost and lower comparative advantage

63
Q

Explain trade diversion using the example of the UK joining the EU and stopping trade from New Zealand?

A

Before Uk joined the EU it had common tariff on all butter imports and chose to import from low cost New Zealand.
After the UK joins the EU it can benefit from tariff free imports from Denmark and other EU producers at a price of P1.

Consumer surplus gains 1 + 2 + 3 +4 and UK dairy farmers lose producer surplus of 1, loss of tariff revenue from the government is 3 + 5.

Net loss from trade diversion in joining the EU if 2 + 4 is less than 5. A net gain from trade diversion would arise if 2 + 4 was greater than 5.

64
Q

What are the evaluative points of trade diversion?

A

Depends of size of customs union tariff - smaller tariff has less benefits in therms of trade creation, domestic producers can still compete

Depends on PED - more elastic PED = more likely to be net welfare loss due to the more inefficient imports from within the CU. Inelastic demand is more likely to have a net welfare gain.

A-Level Macroeconomics (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions