week 1 Flashcards
what is macro economic policy?
policy measures used by the government and the central bank to affect the overall performance of the economy
this includes fiscal (government) and monetary (central bank) policy
what is inflation?
an increase in the overall price level.
what is hyper inflation?
a period of very rapid increases in the overall price level
what is deflation?
Deflation is a decrease in the price level
what is disinflation ?
is a decrease or slowdown in rising prices
how would we calculate inflation?
the percentage change in prices between two periods
what is the definition of unemployment
refers to the number of individuals in the labour force who are without a job and are looking for a job
what is the formula for economic growth?
rate of change of real gdp.
what does real gdp measure?
the total income of an economy and is closely related to the economy’s aggregate output it also measures total output using constant prices
what is aggregate output
the total quantity of goods and services produced in an economy in a given period
how can aggregate output be increased?
Fiscal policy , Monetary policy
what is the business cycle
short-term fluctuation of total output around its trend path
this includes peaks, slumps, recession, booms and growth
what does the circular flow model allow for us to explain?
A goal for macroeconomics is to explain the determinants of national income and output. This means that as a whole income must equal expenditure
what are the injections into the economy?
Investment government spending and exports
what are leakages out of the economy?
savings taxes and imports
what is Gross national income?
GNI represents the total income of the permanent residents of the UK valued at market prices
how does GNI differ from GDP
GNI differs from GDP by Including income that UK residents earn from owning foreign assets i.e. assets owned abroad Excluding income that non-UK residents earn from owning assets based in the UK
what is capital depreciation?
the rate at which the value of existing capital stock declines per period as a result of usage
an example being technology over time becomes less valuable or cars become less valuable after the more usage
what is the difference between nominal vs real values
economic variables achieved by deflating economic data i.e. holding prices constantwhereas nominal just uses the current price period
what is the circular flow model?
and draw it
The circular flow model is an economic diagram that shows how money, goods, services, and resources move through the economy. It illustrates the interactions between households, businesses, and the government in the markets for goods/services and factors of production.
