UNIT 3 AOS 2 DP 1-10 Flashcards
DP 1-10 Ch. 2.2 to 2.11 (20 cards)
What is the difference between material and non-material living standards?
Material standards relate to access to goods and services. Non-material standards refer to quality of life (e.g. happiness, health, environment).
Name three factors that affect living standards.
Access to goods/services, crime rates, environmental quality (others: health, literacy).
What are the five sectors in the circular flow model?
Households, businesses, government, financial institutions, and the external sector.
What is the role of households in the circular flow model?
Provide resources (labour), receive income, and spend on goods/services.
What does the external sector include in the circular flow model?
Exports and imports with other countries.
Name the four main phases of the business cycle.
Boom, downturn, recession, recovery.
What can cause changes in the business cycle?
Changes in confidence, interest rates, global events, or demand/supply shocks.
What is aggregate demand (AD)?
Total spending on goods and services in the economy (AD = C + I + G + (X – M)).
List three factors that influence aggregate demand.
Disposable income, interest rates, consumer confidence (others: exchange rates, business confidence).
What is aggregate supply (AS)?
Total output producers are willing to supply at a given price level.
Name two factors that affect aggregate supply.
Costs of production, productivity growth (others: technology, climate, regulations).
What is the goal of strong and sustainable economic growth?
Growth that is consistent, avoids high inflation, and protects the environment.
How is economic growth measured?
Growth in real Gross Domestic Product (GDP).
What happens if economic growth is too low?
High unemployment and reduced living standards.
What are possible consequences of growth being too high?
Inflation and environmental degradation.
What is the goal of full employment?
Everyone willing and able to work can find a job.
What does NAIRU stand for?
Non-Accelerating Inflation Rate of Unemployment.
Who are the hidden unemployed?
People who want work but are not actively looking.
What is underemployment?
Working part-time but wanting to work more hours.
What is frictional unemployment?
Short-term unemployment when moving between jobs or entering the workforce.
