Brainscape's Knowledge GenomeTM

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


See full index

economics macro > theme 2 chapter 1 > Flashcards

theme 2 chapter 1 Flashcards

1
Q

what is Inflation, deflation and disinflation?

A

Inflation - increase in average price level (positive)
Deflation - decrease in average price level (negative)
Disinflation - decrease in the rate of inflation (positive)

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

What is the process of measuring Inflation?

A

Expenditure survey - 11000 homes track spending
Form typical basket of goods - 700 most common goods
good + service weighed to reflect % of income spent
Price survey - record each items price regularly over whole UK
Displayed in weighed index
CPI - consumer price index

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

What does CPI exclude?

A

Mortgage repayment - use RPI instead includes payments

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

Limitations of measuring inflation?

A

small sample - only 11000 households
trends change faster than surveys
miss special offers and deals
product quantity changes - more for the money
hidden inflation can be missed
no mortgage repayment - doesn’t show true cost of living

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

Meaning of unemployment and underemployment + working population?

A

unemployment - without work but actively seeking
underemployment - employed but either want to work more or not using their skills
WP - 18 to 65

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

difference between economically active and inactive?

A

A - 18 to 65 and either employed or unemployed and looking
IA - unemployed and not looking

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

How to work out rate of unemployment?

A

Rate of unemployment = (number unemployed/active) x 100

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

Two ways to measure unemployment?

A

Claimant count and ILO (labour force survey)

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

what is claimant count and its ads and disads?

A

WHAT - count of number of people claiming and receiving job seekers allowance
ADS - cheap, quick, manipulative for government
DIS - only 18+, eligibility rules (house income/savings) underestimate

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

What is ILO and its ADS and DIS?

A

WHAT - telephone survey
ADS - international measure, more accurate, easy to compare, actively seeking out for 4 able back in 2
DIS - only sample, bias, time consuming

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

what is the balance of payments?

A

records of all transactions between UK and the rest of the world

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

what are imports (M) and exports (X) ?

A

M - produced overseas and purchased bu UK consumer
X - produced domestically and purchased by overseas consumer

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

What is a current account and a deficit and surplus account?

A

CA - difference between value of imports and exports
CAD - value of imports exceeds value of exports
CAS - value of exports exceeds value of imports

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

what are the four components of current accounts?

A
  1. trade in goods
  2. trade in services
  3. investment income
  4. net transfers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the causes for current account deficit ?

A

high unit costs
lack of resources
poor quality image
exchange rate changing

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

Nominal GDP / Real GDP

A

N - total value of goods and services produced in the economy
R - total volume of goods and services produced with effects of inflation removed

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

PPP

A

Purchasing power parity - adjust the data to allow for variations in the cost of living between different countries

18
Q

GNP and GNI

A

gross national product and gross national income

19
Q

Recession

A

Fall in real GDP for 6 consecutive months leading to negative economic growth

20
Q

Problems with GDP data when comparing

A
  1. population size can vary
  2. hides inequality and uneven income distribution
  3. misses non-market transactions
  4. don’t know size off public sector
  5. variations in what outputs
  6. number of hours worked
  7. environmental impact
21
Q

Main two problems with GDP data

A

Hides inequality - one rich person skews data leading to people looking better off than they really are
miss non-market transactions - LIC countries do lots of trade and cash payment which is no collected in GDP making people look poorer than they really are

22
Q

why is GDP data good

A

Can be used internationally - not subjective so not bias. easy to compare as greater GDP usually better standard of living
useful if within composite indicator - (HDI) shows more than just GDP also includes healthful and education indicator.

23
Q

what are the measures for standard of living

A

Healthcare
education
infrastructure
power consumption
% of males in agriculture

24
Q

healthcare indicators

A

infant mortality
life expectancy

25
Q

infrastructure indicators

A

access to clean water
sanitation facilities
paved roads

26
Q

education indicators

A

literacy rates
school enrollment

27
Q

factors effecting happiness

A

family relationships
financial situation
community and friends
health
personal freedom
personal values

28
Q

how does income effect happiness

A

for anyone unable to meet basic needs money brings happiness to
an increase in income will boost happiness for a period of time until you get use to it

29
Q

how does income not effect happiness

A

income is quickly normalised
no evidence HIC is happier than LIC
no evidence happiness has improved overtime

30
Q

what is demand pull inflation

A

increase in price level due to increased demand

31
Q

what is cost push inflation

A

increase in price level due to increase in cost of production reducing supply

32
Q

what are the 6 effects of inflation

A
  1. reduces real value of incomes
  2. erodes the value of money
  3. destroys international competitiveness (UK goods look more expensive)
  4. causes uncertainty for firms sales
  5. shoe-leather costs and menu costs
  6. fiscal drag
33
Q

what are the 8 causes of unemployment

A
  1. cyclical / demand deficient
  2. structural unemployment (Steel mining)
  3. tech advances
  4. seasonal unemployment
  5. frictional unemployment (time between jobs)
  6. real wage inflationary (over supply of workers)
  7. immobility of labour
  8. welfare is too high
34
Q

what is the impact of unemployment on households

A
  • loss of income
  • worsen mental health
  • skill loss when not working
35
Q

what is the impact of unemployment on the government

A
  • increased welfare payments
  • decreased tax revenue
  • worsen budget deficit
  • less finance available for investments
36
Q

what is the impact of unemployment on firms

A
  • reduced sales and profit
  • higher insurance and security costs
37
Q

what is the impact of unemployment on economy

A
  • reduced prices
  • reduced GDP output
  • increased output gap
  • inefficient allocation of resources
  • negative multiplier effect
38
Q

what do the effects of unemployment depend on

A
  • size of change e
  • length of trend
  • position of AD on LRAS
39
Q

why can unemployment be good

A
  • reduces risk of inflation
  • improves trade deficit
40
Q

what is net migration, immigration and emigration

A

immigration - number entering country
emigration- number leaving country
net migration - difference between immigration and emigration

41
Q

what are the 3 benefits of immigration

A
  1. bigger population (increase consumption)
  2. bigger workforce ( increased GDP output)
  3. fill skill shortages
42
Q

what are the 4 drawbacks of immigration

A
  1. bigger population (resources)
  2. increased gov spending welfare
  3. unemployment increases
    4.keeps wages low as large poo of cheap labour

economics macro (5 decks)

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