Unit 6 Flashcards
(28 cards)
What are the 6 macro economic objectives?
- Economic Growth
- Unemployment
- Balance of Payments
- Budget Balance
- Inflation
- Equitable distribution of Income
What are the more important 4 objectives?
- Economic Growth
- Inflation
- Unemployment
- Balance of Payments
What is economic growth?
+ key benefits of it
"The rate of change of a country's output" Measured in GDP Benefits: \+ Job Creation \+ Rising incomes \+ Improved standards of living \+ Improved confidence \+ Lower gov spending on welfare benefits
What is unemployment?
+ key benefits
(of low unemployment)
Amount of people able to, but that are not in work Benefits: \+ Higher consumption and AD \+ Higher incomes \+ Improved standards of living \+ Higher tax for government \+ Improved productivity of UK \+ Reduced poverty
What is inflation?
“Rate of change of average prices in an economy”
Target of 2% in the UK
What is Balance of Payments?
Significant deficit on the current account.
Surplus in services
Provides consumers with wider choices
Cheaper raw materials
What is Balanced Budget?
Value of government spending compared to how much is gained through tax
How is inflation measured?
RPI or CPI
What is the basket of goods and services?
Goods and services which are based upon consumers spending patterns that year
How do you measure unemployment?
Claimant count or Labour Force Survey
What are the different types of unemployment?
Cyclical, frictional, structural, regional, technological, seasonal
What is structural unemployment?
there is a difference between the characteristics workers have e.g. skills and geographical mobility, and the characteristics required by employers
What is frictional unemployment?
The period of time when a worker is moving between jobs
It is usually considered to be short term in nature
What is seasonal unemployment?
occurs through seasonal fluctuations in demand throughout the year
What is technological unemployment?
Created through the increasing degree of automation in the production process
What is regional unemployment?
Typically linked to structural unemployment, a situation where a town or region experiences a downturn; for example through the declining importance of an industry which is heavily favoured in that area
What are the consequences of high unemployment?
Lower living standards De-skilling Crime Unemployment trap Government finances Lost output Lower competitiveness Rising inequality Lower consumer spending
What are the different types of productivity?
Labour - output per worker
Capital - output per unit of capital
Factor - average output of all FOP
What are the 3 types of account?
Current
Financial
Capital
What are index numbers?
A given number, which can be interpreted by comparing it to the base year (100)
How do you calculate a weighted index number?
Sum of weightings x index numbers / Sum of weightings
What are the issues with CPI?
Never reflects exact spending
What is marginal physical product?
Amount of extra output produced from 1 extra worker
How do you calculate MRPL?
MPP x MR
