1.1 - Introduction to Macro Economics Flashcards

1
Q

How do we measure Growth?

A

Gross Domestic Product (GDP)

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2
Q

What does Output tell us?

A

Whether the country is able to deliver more goods and services to citizens over time.

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3
Q

What can we use to measure how well our economy is doing?

A

Output
Unemployment Levels
Inflation
Balance of payments

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4
Q

What is the gap between trend and actual known as?

A

Output Gap

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5
Q

What are some consequences of unemployment?

A

Huge Opportunity cost - it is a waste of scarce resources and the lost output can never be recovered. There can also be social unrest if the unemployment rates are high.

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6
Q

What is inflation?

A

Rise in the general price level.

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7
Q

What is the wage price spiral?

A

Workers may push for higher wages, which will increase business costs which they may pass on in the form of higher prices.

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8
Q

What is a balance of payments?

A

Keeping a record of exports and imports.

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9
Q

How may producers/firms wish to maximise profit?

A

Producing at the lowest cost

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10
Q

What does the Government wish for?

A

Maximise economic and social welfare of citizens.

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11
Q

What are the four resources?

A

Labour
Capital
Land
Enterprise

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12
Q

What is the difference between a economic good and a free good?

A

Free goods have zero opportunity cost.

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13
Q

What is geographical mobility?

A

The resource can move geographically, e.g Labour can move from one place to another.

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14
Q

What is innovation?

A

New process of growing - greater productivity,

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15
Q

What is infastructure?

A

A crucial type of social capital.

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16
Q

What is trend growth?

A

Average/Long Term Growth

17
Q

How does trend growth link to actual growth?

A

If the actual growth is higher than the the trend growth, economy is in a boom. If the trend growth is higher than the actual growth we are in a recession.

18
Q

What is the definition of unemployment?

A

Willing & Able but cannot find a job.

19
Q

What is opportunity cost?

A

The best alternative forgone.

20
Q

Why do people have to make choices?

A

Wants exceed resources.

21
Q

What is disinflation?

A

Falling inflation, prices are still rising.