Theme 2 (MR SLATTERY) Flashcards
(66 cards)
1
Q
What can GDP be measured by?
A
- total output
- total spending
- total income
2
Q
What are some of the causes of economic growth?
A
- improved training
- better education
- better machinery
- motivated workers
3
Q
What are the four types of unemployment?
A
- frictional
- cyclical
- seasonal
- structural
4
Q
What are some benefits of using the claimant count?
A
- up to date
- cheap to use
5
Q
What are some problems with using the claimant count?
A
- misses out on some people (under 18 and over 66)
- not used in Europe
6
Q
What are some benefits of using labour force survey?
A
- used in Europe
- uses everyone
7
Q
What are some problems of using labour force survey?
A
- expensive
- time consuming
8
Q
What are parts of the balance of payments?
A
- current account
- capital account
- financial account
9
Q
What are parts of the capital account?
A
- capital transfers
10
Q
What are parts of the financial account?
A
- foreign direct investments
- net portfolio investment
- other financial items
11
Q
What are parts of the current account?
A
- net exports and imports
- net transfers
- net income
12
Q
How to increase the current account?
A
- reduce foreign investment
- invest productivity
- put a tax on imported goods
13
Q
What causes inflation to rise (demand)?
A
- time of year
- trends/taste
- reviews
14
Q
What cause inflation to rise (supply)?
A
- increased costs of raw materials
- increased cost of rent
- taxes
15
Q
How to measure inflation?
A
- base year index x price change (%) = price index
- price index x weighting (then put decimal place two places to the left)
- answer - base year index
16
Q
What are some benefits of inflation?
A
- inflate away debt
- people will feel richer
- wages increase
17
Q
What are some problems of inflation?
A
- badly effects low income people
- wages are worth less
- bigger gap of inequality
18
Q
What are some benefits of economic sustainability?
A
- cost saving
- more jobs and training
- increased innovation and efficiency
19
Q
What are some problems of economic sustainability?
A
- inefficient use of resources
- opportunity cost
20
Q
What happens when supply side policies are successful?
A
- stimulate job creation
- economic growth
- output and employment increases
21
Q
What are some interventionist policies?
A
- spending on healthcare
- building business parks
- increased education and training
22
Q
What are some market policies?
A
- lower tariff barriers
- reducing state welfare benefits
- providing better information about jobs
23
Q
Why might deflation be damaging for an economy?
A
- debts increase
- lower profit margins
- higher unemployment
24
Q
Why might deflation be good for an economy?
A
- makes exports become more competitive
- lower interest rates -> increased savings
25
What are the main weakeness of supply side policies?
- skills shortages
- ageing infrastructure
- productivity gap
26
What are some drawbacks of privatisation?
- will prices go up as businesses are making a profit?
- exploitation of consumers
27
What are some critics of MARKET BASED supply side policies?
- income inequality
- reduced social safety nets
28
What are some macroeconomic supply side policies?
- income and corporation tax changes
- increased in state spending on healthcare and socialcare
- increased funding of education
29
What are some microeconomic supply side policies?
- work visas for occupations
- fiscal supply side policies
30
What are some advantages of interventionist supply side policies?
- lower unemployment
- improved efficiency
31
What are some disadvantages of interventionist supply side policies?
- crowding out a private sector
- reduced incentives
32
What are some benefits to the consumer price index (CPI)?
- tracks inflation
- adjusts payments (pensions etc)
33
What are some limitations to the consumer price index (CPI)?
- doesn’t incorporate consumer responses to changing relative prices
- excludes new goods and services
34
What are some free market supply side policies?
- tax cuts (eg corporation and income)
- trade liberalisation
- labour market flexibility
- deregulation
- privatisation
- competitive policy
- immigrant reforms
- gender diversity
35
Why are purchasing power parity used?
To compare economic performance and living standards across different countries accounting for price level differences
36
What are some advantages of purchasing power parity?
- increase efficiency
- risk sharing
37
What is the formula for the index number?
(New base/base value) x 100
38
What are some advantages of using GDP?
- helps track economic performance
- influences investors decisions
39
What are some disadvantages of using GDP?
- failure to account for non-market based activities
- income inequality
40
What are some effects of unemployment?
- reduced consumer spending
- increases poverty
41
How does ILO measure unemployment?
Based on a persons labour market status
42
How to calculate consumer price index?
Current product price total/past product price total
43
How to get into a budget deficit?
- increased government spending
- higher unemployment
44
How to get into a budget surplus?
- increased tax revenue
- higher employment
45
What are some government policies?
- economic
- environmental
- healthcare
- education
46
What are some economic policies?
- fiscal policy
- monetary policy
- structural reforms
- trade policy
47
What are some benefits of tax cuts?
- increased consumer spending
- increased investments
- incentives
48
What are some benefits of raising taxes?
- funding for public services
- increased government revenue
49
What are some drawbacks of raising taxes?
- tax avoidance
- reduced consumer spending
50
What are some drawbacks of tax cuts?
- increased debt
- cuts in public services
51
What are some causes of trade deficit?
- strong exchange rate
- lower productivity
- lower investments
52
What are some causes of trade surplus?
- weaker exchange rate
- higher productivity
- higher investments
53
What are some causes of a negative output gap?
- reduced demand
- reduced investments
- reduced employment
54
What are some causes of a positive output gap?
- higher demand
- higher investments
- higher employment
55
What might causes a rise in disposable income?
- increased wages
- lower inflation
- tax cuts
56
What might causes a fall in disposable income?
- increased taxes
- increased unemployment
- increased interest rates
57
What are some costs of production?
- wages
- raw materials
- business taxes (VAT)
- import prices
58
What does the current account measure?
- trade of goods
- trade of services
- income
- transfers
59
What are some benefits of supply side policies?
- all macroeconomic objectives improved
- sustainability (non-inflationary)
60
What are some drawbacks of supply side policies?
- very expensive (opportunity cost)
- no guarantee that they will work
61
What is some evaluation of supply side policies?
DEPENDS ON
- initial level of economic activity
62
What are some benefits of privatization?
- increased efficiency and productivity
- improved services
63
What are some disadvantages of power purchasing parity?
- measurement difficulty’s
- ignoring non-tradable goods and services
64
How is CPI measured?
Tracking the price changes of the "basket" of goods and services, weighted by their importance in consumer spending
65
How is the labour force survey measured?
Measured by interviewing a sample of households each quarter
66
How is the purchasing power parity measured?
Comparing the prices of a common basket of goods and services in different countries
