2.1 Government and the Economy: Unit 25 - 27 Flashcards
- Economic growth - Inflation - Unemployment
- What is budget deficit?
- amount by which government spending is greater than government revenue.
- What is macroeconomics?
study of large economics systems such as those of a whole country or area of the world.
- What is microeconomics?
study of small economic systems that are part of national or international systems.
- What is economic growth?
increase in the level of output by a nation.
- What is a national income?
value of income output or expenditure over a period of time.
- What is gross domestic product?
market value of all final goods and services produced in a period(a year), an internationally recognized measure of national income.
- What are the limitations of GDP as a measure of growth? (7)
- inflation
- population changes
- statistical errors
- the value of home-produced goods
- the hidden economy
- GDP and living standards.
- External costs
- What is the economic cycle?
the economic cycle shows the rate of growth of GDP at different stages/phases: boom, downturn, recession, and recovery.
- What is the boom in the economic cycle?
boom is a peak of the economic cycle where GDP is growing at its fastest.
- What is downturn in the economic cycle?
- a period in the economic cycle where GDP grows, but more slowly.
- What is recession/ depression in the economic cycle?
- period of temporary economic decline during which trade and industrial activity are reduced.
- What is a recovery in the economic cycle?
Recovery is where GDP starts to rise again, where economic activity increases.
- What are the 4 advantages of economic growth?
- Fall in unemployment
- Improve standards of living.
- Reduce poverty
- Raise productive potential
- What are the 2 disadvantage of economic growth?
- Inflation may increase as a result of overheating in the economy
- The environment will be damaged due to unsustainable growth in the economy.
- What is overheating?
it is when demand rises too fast, causing prices and imports to rise, a situation that governments may try to correct by raising taxes and interest rates.
- What is unsustainable growth?
economic growth that it is not possible to sustain without causing environmental problems.
- What is inflation?
the rate at which prices rise, a general and continuing rise in prices.