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Economics > The Macroeconomy > Flashcards

The Macroeconomy Flashcards

(60 cards)

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1
Q

National income and
National income statistics

A

Country’s total output

Measure of the country’s total output

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2
Q

GDP

A

The total output produced in a country

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3
Q

GNI

A

GDP plus net income from abroad

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4
Q

Net property income from abroad

A

Profits, rent and interest earned on ownership of foreign assets minus payments of profits, rent and interest to non-residents

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5
Q

Compensation of employees

A

Income of workers who work in another country for a short period of time

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6
Q

Gross national disposable income

A

GNI plus net transfer of incomes to relatives and from other countries

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7
Q

MNC’s

A

Firms that operate in more than one country

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8
Q

Circular flow of income

A

A simplified view of how income flows around an economy

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9
Q

Methods of measuring GDP

A

-Output method- By calculating the total production of goods and services of a country.

-Income method- By calculating incomes earned by producing country’s output.

-Expenditure method- By calculating all spending on country’s output.

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10
Q

Market prices and
Basic prices

A

Prices paid by consumers.(With account of indirect taxes and subsides)

Prices charged by producers before the addition of indirect taxes and deduction of subsides

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11
Q

Gross investment

A

Total spending on capital goods

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12
Q

NDP

A

GDP - depreciation

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13
Q

NNI

A

GNI - depreciation

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14
Q

Net investment

A

Additions to capital stock

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15
Q

Depreciation (capital goods)

A

Value of capital goods that have been worn out or out of date

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16
Q

Open economy

A

Economy open to trade

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17
Q

Closed economy

A

Economy not open to trade

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18
Q

Circular flow of income in both open and closed economy

A

Refer to textbook

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19
Q

Injections

A

Additions to the circular flow if income, includes I+G+X (Investment + Govt. spending + Export)

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20
Q

Leakages

A

Withdrawals from the circular flow of income, includes S+T+M (Saving + Taxation + Import

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21
Q

Equilibrium and Disequilibrium graph

A

Refer to textbook

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22
Q

Aggregate demand

A

The total demand for an economy’s goods and services at a given price level in a given period of time.

AG= C + I + G + (X-M)

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23
Q

Dissaving

A

Consumer expenditure exceeding income by people or countries withdrawing past savings or by borrowing

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24
Q

Why do AG and price level have a direct relationship

A

-Wealth effect
-International effect
-Interest rate effect

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25
Aggregate supply
The total output that producers in an economy are willing and able to supply at a given price level at a period of time
26
SRAS
AS when there has not been enough time for the prices of factors of production to change
27
LRAS
AS when prices of factors of production have been fully adjusted
28
Reasons for SRAS positive effect
-Profit effect -Cost effect -Misinterpretation effect
29
Shifts in SRAS
-Change in price of factors of production -Change in taxes on firms -A change in factor productivity or quality of resources -Change in quantity of resources
30
Supply-side shocks
Large and unexpected changes in SRAS
31
Types of LRAS curves
-Keynesians LRAS curve- People who agree w the views of John Maynard Keynes and give intervention is needed to achieve full employment. (Refer to TB) -New classical economist curves-Economists who think that economy will move toward full employment without govt intervention.(Refer to TB)
32
Shifts in LRAS
-Net immigration -Increase in retirement age -More women entering the labour force -Net investment -Discovery of new resources -Land reclamation
33
Economic development
Increase in the welfare and quality of life
34
Nominal and Real GDP
Nominal GDP is the total output measured in current prices Real GDP is the total output measured in constant prices
35
Price index
A way of comparing the changes in price overtime
36
Causes and consequences of economic growth
-Increase in quantity of resources -Increase in quality of resources
37
Benefits and Costs of economic growth
Benefits -Increase in availability of goods and services -Increase in tax revenue -Increase in transfer of payments -More job opportunities -Increase in business investment Cost -Resources moved from producing consumer to capital goods -Workers may have to learn new skills -Depletion of natural resources
38
Unemployment
the state of being willing and able to work but not having a job
39
Labour force participation rate
The proportion of the population that are working age and who are either working or actively seeking work
40
Factors that contribute to the size of the labour force
-School leaving age -Proportion of the women in workforce -Retirement age -no. of people who remain in full time education(above the school leaving age)
41
Unemployment rate
no. of people employed _____________________________X100 no. of people in the labour force
42
Ways of measuring unemployment
Claimant count measure - a measure of unemployment based on those claiming unemployment benefits Labour force survey measure - a measure of unemployment based on a survey that identifies people who are actively seeking a job
43
Frictional unemployment and its types
Unemployment that is temporary and is when workers are switching between jobs. -Voluntary - Unemployed people choosing not to accept jobs at wage rate -Search - When people take time looking for jobs they are willing to accept -Casual - When people have left a short term job and before they take up another one -Seasonal - Unemployment arising during particular times where demand for a product falls
44
Structural Unemployment and its types
Unemployment caused by the result of the changing structure of economic activity -Regional - Arising from a decline in jobs from a particular area -Technological - Caused by advances in technology -International - When a country loses it international competitiveness in producing a product
45
Cyclical Unemployment
Unemployment that results from lack of AD
46
Underemployment
A situation where workers are working fewer hours than they like to or working jobs they are overqualified at
47
Price stability
A low stable inflation rate
48
Inflation
An increase in the economy's price level over a period of time
49
Types of inflation
Creeping- A low rate of inflation Hyperinflation- A very high rate of inflation, which may result in people losing confidence in the currency
50
Deflation
A fall in price level
51
Disinflation
A fall in inflation rate
52
Ways to calculate inflation
Annual average method- by calc inflation rate by comparing the average level of prices during one 12 month period to the previous 12 month period Year on year method- by calc inflation rate by comparing the % change in price level for a given month and the same month of the previous year
53
Consumer price index(CPI)
A measure that shows the average change in prices of a representative basket of products purchases by households
54
How to calc CPI
1.Select base year 2.Find people's spending patterns 3.Attach weights to different categories 4.Find out price change 5.Muliply weights by price changes
55
Cost push inflation
Inflation caused by increase in cost of production
56
Wage price spiral
Higher wages causing prices to rise, in turn, pushes wages up and so on
57
Demand pull inflation
Inflation caused by increase in AG not matched by a equivalent increase in AS
58
Monetarists
Economists who consider that inflation is caused by a excessive growth in the money supply
59
Benefits and limitations of Inflation
Benefits -Stimulates output =Reduces the burden of debt -Prevents some unemployment Limitations -Reduction in net exports -Menu costs -Fiscal drag -Discouragement of investment -Shoe leather costs
60
Factors that affect the consequence of inflation
-Cause of inflation -Rate of inflation -Accelerating or stable inflation -Expected or Unanticipated -Compared to others

Economics (4 decks)

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