1.2 - Macroeconomic indicators Flashcards
What is the consumer often referred to as?
Heart of Economics
What is full employment?
Always some unemployment, full employment minimises unemployment.
What is our price stability number?
2%
What is balancing the budget?
Budget is where we have tax and spending plans announced by the government.
What is a budget deficit?
When we spend more than we recieve.
What are the cons of borrowing money?
Pay interest, and have to pay the money back.
What are the four main indicators to tell us how a country is doing?
GDP (Real GDP per Capita)
CPI and RPI (Consumer and Retail Price Index)
Unemployment figures
Current Account of the balance of payments.
What indicators are known as lag indicators?
Unemployment, Inflation and Balance of Payments.
What are Lead indicators?
Provide information on what may happen less, consumer and business confidence.
What is a nominal rise?
Not adjusted rise.
How do you calculate the real increase in GDP?
Take into account the price rises, take away inflation.
What is GNI?
Gross National Index is another way of measuring the size of the economy.
GNI = GDP + Net property income from abroad (NPIA)
What is the economic cycle?
Where actual growth varies around trend.
What is a positive output gap?
Where actual growth is above the trend rate.
How do you get a positive output gap?
High demand for goods and services.
What is derived demand?
Demand for the workers that made those goods and services.
What does derived demand result in?
Falling unemployment.
Benefits of low unemployment?
Low benefits paid
Increase in tax paid
Increase in living standards.
What does RPI stand for?
Retail Price Index
What does CPI stand for?
Consumer Price Index
Who uses the CPI?
Government
What does the RPI include that CPI doesn’t?
Mortgages, debt taken on when purchasing a house.
What is disinflation?
When inflation goes down (NOT PRICES).
What is deflation?
When prices decrease, has to be a negative number.
What is a weighted index?
Reflects what we spend our money on.
When may RPI be a better index to use?
If you have a mortgage.
What is the claimant count?
Number of people claiming benefits and out of work.
What is the ILO?
International Labour Organisation - Survey on Unemployment.
What is the current account?
A monetary value of goods and services imported and exported.
What are transfer payments?
Payments from the government to benefit recipients.
What is the hidden economy?
The “black” economy, illegal and under the table that the government doesn’t see.
Why is teachers pay not a transfer payment?
Teachers not on benefits, earnt the money not benefits.
How are index levels used?
Designed to measure magnitude of economic changes over time.
How do you calculate index levels?
year of interest / base year * 100
What are the four economic cycle processes?
Boom
Recession
Slump
Recovery
What occurs during boom phase?
The economy is hot and most people have jobs.
It may be hard for businesses to recruit workers.
Imports will be flowing into the UK.
What happens during recession phase?
Economy is slowing
People may be losing their jobs.
Businesses may be worried and will stop investing.
What happens during the slump phase?
Economy is in trouble and many may be out of work.
Confidence is low and economic activity may be at a all time low.
What happens during recovery phase?
Economy is starting to pick up and firms start to hire again.
Confidence grows, people start spending and the cycle begins again.
What is the link between GDP, national income and national expenditure.
They are all the same, all equal each other.
What does the letter Y symbolise in economics?
National Income, proxy for GDP.
What are the factors of production?
Land
Labour
Capital
Resources.
What does more saving result in?
Less consumption.
What is it called when households start to save money? (circular flow)
Leakage.
What is a closed economy?
No international trade.
What are the three different types of leakages?
Tax
Imports
Savings
What are the three different types of injections?
Investment
Government Spending
investments
What is the link between deflation and buying?
Buyers Strike - People wait until prices decrease.
