2.1

Question 1

Economic Growth

Answer 1

Rise in GDP

Question 2

GDP

Answer 2

Gross domestic Product total amount of G+S produced in an economy

Question 3

Real GDP

Answer 3

GDP accounted for inflation

Question 4

Nominal GDP

Answer 4

GDP not accounted for inflation

Question 5

Total GDP

Answer 5

Value of all G+S produced in a time period

Question 6

GDP per capita

Answer 6

GDP divided by population

Question 7

Gross national product

Answer 7

value of products produced an annum by labour and property provided by citizens of one country

Question 8

Gross national income

Answer 8

total domestic and foreign output claimed by residents of a country

Question 9

Purchasing Power Parity

Answer 9

How much exchange rate needs adjusting to exchange between countries fairly

Question 10

Inflation

Answer 10

rise in price level over time

Question 11

Consumer price index

Answer 11

calculates inflation by measuring household purchasing power parity with the family expenditure survey takes into account product switching

Question 12

Limitations of CPI:

Answer 12

Demographics spend money differently
BOG only represents the average household
CPI slow to respond to new G+S

Question 13

Retail price index

Answer 13

calculates inflation by including housing costs, excludes top 4% earners and low income pensioners

Question 14

Causes of inflation:

Answer 14

Demand Pull - When AD grows unsustainably
Cost Push - When cost of production increases
Growth of money supply - If more money was printed

Question 15

Effects of inflation on Consumers

Answer 15

Cost of necessities increases, Real value of debt decreases

Question 16

Effects of inflation on Firms

Answer 16

Interest rates increase so investment decreases

Question 17

Effects of inflation on Workers

Answer 17

Less disposable income

Question 18

Measures of unemployment:

Answer 18

Claimant count - number of people claiming benefits
ILO and LFS - international labour organisation and labour force survey asks people if they’ve been out of work for 4 weeks and are able to work within 2 weeks

Question 19

Unemployed

Answer 19

those able and willing to work but unemployed

Question 20

Underemployed

Answer 20

employed but their labour is not used to its full productive potential

Question 21

Effects of unemployed/underemployed on consumers

Answer 21

less disposable income so standard of living falls

Question 22

Effects of unemployed/underemployed on firms

Answer 22

firms have a larger supply of labour to employ from causing wages to fall low disposable income means consumption decreases so firms lose profits

Question 23

Effects of unemployed/underemployed on workers

Answer 23

can lose skills if out of work for a long time

Question 24

Effects of unemployed/underemployed on Government

Answer 24

have to pay more benefits which could have been used somewhere else

Question 25

3 Causes of Unemployment

Answer 25

Structural unemployment - When G+S from certain industries are no longer in demand
Frictional unemployment - time between leaving a job and finding another one
Seasonal unemployment - certain jobs have a peak in seasons where more people are employed

Question 26

Balance of payments

Answer 26

financial records of all transactions from one country to others

Question 27

Current account surplus

Answer 27

net inflow of money into circular flow of income

Question 28

Current account deficit

Answer 28

net outflow of money into circular flow of income