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Economics - Both Years > (1) Chapter 6 - The measurement of macroeconomy performance > Flashcards

(1) Chapter 6 - The measurement of macroeconomy performance Flashcards

1
Q

What is MACROECONOMICS

A

The study of the whole economy at the aggregate level

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2
Q

What is a POLICY OBJECTIVE

A

A target that policy-makers wish to achieve

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3
Q

What are the main policy objectives

A
  • Full employment/ low unemployment
  • Economic growth and to improve standards of living
  • Control inflation, price stability
  • Satisfactory balance of payments
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4
Q

Define SHORT-RUN ECONOMIC GROWTH

A

Growth of real output from using idle resources

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5
Q

Define LONG-RUN ECONOMIC GROWTH

A

Increase in the economy’s potential level of output, outward shift of the economy’s PPF

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6
Q

What is GROSS DOMESTIC PRODUCT

A

The sum of all goods and services produced in the economy over a period of time

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7
Q

Define REAL GDP

A

The measure of all goods and services produced in an economy, adjusted for inflation

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8
Q

Define NOMINAL GDP

A

GDP measured at the current market prices, without removing the effects of inflation

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9
Q

What is the difference between REAL and NOMINAL GDP

A

Real GDP takes account of prices changes (inflation) whereas nominal does not

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10
Q

Define RECESSION

A

A fall in real GDP for 6 months or more

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11
Q

How much in % is FULL EMPLOYMENT

A

3% or less of the labour force

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12
Q

What is the CLAIMANT COUNT

A

A method of measuring unemployment from the people claiming unemployment benefits

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13
Q

What is the LABOUR FORCE SURVEY

A

A quarterly sample of households in the UK

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14
Q

Define INFLATION

A

Continuing rise in the average price level

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15
Q

Define DEFLATION

A

Continuing fall in the average price level

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16
Q

Define DISINFLATION

A

The rate of inflation is falling but still positive

17
Q

What is the PRICE INDEX

A

An index number showing the extent to which a price (basket of prices) have changed over a period of time

18
Q

What is the CONSUMER PRICES INDEX (CPI)

A

A measure of inflation. The average price increase of a basket of 700 different goods and services

19
Q

What is the RETAIL PRICES INDEX (RPI)

A

Older way of measure inflation

20
Q

Define INDEXATION

A

The automatic adjustment of items such as pensions to changes in price level through the use of a price index

21
Q

Define BALANCE OF PAYMENTS

A

A record of all the currency flows into and out of a country

22
Q

Define EXPORTS

A

Goods/services sold to other countries

23
Q

Define IMPORTS

A

Goods/services bought from other countries

24
Q

Define BALANCE OF TRADE

A

The difference between the money value of a country’s imports and its exports

25
Q

What is a BALANCE OF TRADE DEFICIT

A

Imports > Exports

26
Q

What is a BALANCE OF TRADE SURPLUS

A

Imports < Exports

27
Q

What is a BALANCED BUDGET

A

When government spending equals government revenue (tax)

28
Q

What is a BUDGET DEFICIT

A

When government spending is greater than the revenue

29
Q

What is a POLICY CONFLICT

A

When two policy objectives cannot both be met at the same time

30
Q

What are examples of POLICY CONFLICTS

A

Full employment and economic growth vs satisfactory of balance of payments
Full E and EG vs control of inflation
EG vs greater income equality
Current living standards vs future living standards

31
Q

What is a PERFORMANCE INDICATOR

A

Provides information for judging the success/failure of a government policy

32
Q

What are the main beliefs of Keynesian economists

A

Governments should manage the economy, mainly through fiscal policies, encouraging investment

33
Q

What are the main beliefs of pro-free market economists

A

Dislike government intervention in the economy, believing free markets provide incentives to work harder

34
Q

What are INDEX NUMBERS

A

A number used to simplify the changes of price making it easier to see the proportion of the changes. The base year is typically 100

Economics - Both Years (13 decks)

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