17- Macroeconomics Flashcards
What is the Public Sector Net Cash Requirement (PSNCR)?
The difference between what the government has spent in the public sector and what it has generated in income
What are the 3 elements PSNCR is composed of?
-Central government net cash requirement
-Local Government net cash requirement
-Public corporations net cash requirements
What is the difference between RPI and CPI?
RPI strips out mortgage payments
What are the 3 types of economic indicators?
-Leading indicators
-Coincident indicators
-Lagging indicators
What is the difference between GDP and GNP?
GNP includes production by domestic owned factors of production held abroad
What is the Consumption function?
Consumption = autonomous consumption + (MPC x disposable income)
C = a + bYd
What is autonomous consumption?
The base level of consumption we must make even with no disposable income i.e. basic necessities
What is the closed economy & no government (simple) multiplier?
1/(1-MPC)
What is the closed economy with a government multiplier?
1/[1-MPC(1-t)]
What is the open economy with a government multiplier?
1/[1-MPC(1-t)+MPM]
What is sterilisation?
Adjusting the money supply in order to compensate for balance of payments surpluses/deficits
What does the money multiplier look at?
The expansion of money based on investment and the banks’ capital ratios
What is the Money/credit creation multiplier formula?
Money multiplier = 1/Reserve requirement
What is the Monetary base (stock of high-powered money)?
The quantity of notes and coins in the economy
What is Narrow money/wide monetary base (M0 & M1)?
Includes notes and coins in circulation and cash equivalents
