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Economics EDEXCEL IGSCE > 2.1 Government and the Economy: Unit 25 - 27 > Flashcards

2.1 Government and the Economy: Unit 25 - 27 Flashcards

- Economic growth - Inflation - Unemployment

1
Q
  1. What is budget deficit?
A
  • amount by which government spending is greater than government revenue.
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2
Q
  1. What is macroeconomics?
A

study of large economics systems such as those of a whole country or area of the world.

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3
Q
  1. What is microeconomics?
A

study of small economic systems that are part of national or international systems.

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4
Q
  1. What is economic growth?
A

increase in the level of output by a nation.

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5
Q
  1. What is a national income?
A

value of income output or expenditure over a period of time.

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6
Q
  1. What is gross domestic product?
A

market value of all final goods and services produced in a period(a year), an internationally recognized measure of national income.

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7
Q
  1. What are the limitations of GDP as a measure of growth? (7)
A
  • inflation
  • population changes
  • statistical errors
  • the value of home-produced goods
  • the hidden economy
  • GDP and living standards.
  • External costs
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8
Q
  1. What is the economic cycle?
A

the economic cycle shows the rate of growth of GDP at different stages/phases: boom, downturn, recession, and recovery.

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9
Q
  1. What is the boom in the economic cycle?
A

boom is a peak of the economic cycle where GDP is growing at its fastest.

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10
Q
  1. What is downturn in the economic cycle?
A
  • a period in the economic cycle where GDP grows, but more slowly.
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11
Q
  1. What is recession/ depression in the economic cycle?
A
  • period of temporary economic decline during which trade and industrial activity are reduced.
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12
Q
  1. What is a recovery in the economic cycle?
A

Recovery is where GDP starts to rise again, where economic activity increases.

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13
Q
  1. What are the 4 advantages of economic growth?
A
  • Fall in unemployment
  • Improve standards of living.
  • Reduce poverty
  • Raise productive potential
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14
Q
  1. What are the 2 disadvantage of economic growth?
A
  • Inflation may increase as a result of overheating in the economy
  • The environment will be damaged due to unsustainable growth in the economy.
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15
Q
  1. What is overheating?
A

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.

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16
Q
  1. What is unsustainable growth?
A

economic growth that it is not possible to sustain without causing environmental problems.

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17
Q
  1. What is inflation?
A

the rate at which prices rise, a general and continuing rise in prices.

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18
Q
  1. What is aggregate demand?
A
  • total demand in the economy including consumption, investment, government expenditure and exports minus imports
19
Q
  1. What is deflation?
A

period where the level of aggregate demand is falling

20
Q
  1. What is consumer index price? (CPI)
A

measure of the general price level (excluding housing costs).

21
Q
  1. What is the retail price index? (RPI)
A
  • measure of the general price level, which includes house prices and council tax.
22
Q
  1. What are the two types of inflation?
A
  • cost-push inflation
  • demand-pull inflation
23
Q
  1. What is demand-pull inflation?
A

inflation is caused by too much demand in the economy relative to supply.
.

24
Q
  1. What is cost-push inflation?
A

inflation caused by rising business costs.

25
Q
  1. What are interest rates?
A

prices paid to lenders for borrowed money: and rewards to savers. it is the price of money.

26
Q
  1. What is monetarist?
A

economists who believe there is a strong link between growth in the money supply and inflation.

27
Q
  1. What are the 4 possible reasons that cause demand-pull inflation?
A
  • rising consumer spending encouraged by tax cuts or low-interest rates.
  • sharp increases in government spending
  • rising demand for resources by firms
  • booming demand for exports
28
Q
  1. What are the 9 impacts of inflation?
A
  • prices rising
    -wages need to be increased.
  • Export demand falls.
  • Lower levels of employment
  • Menu costs
  • Shoe leather costs
  • Uncertainty
  • business and consumer confidence
  • investment
29
Q
  1. What is menu costs?
A
  • costs to firms of having to make repeated price changes.
30
Q
  1. What is shoe leather costs?
A
  • costs to firms and consumers of searching for new suppliers when inflation is high.
31
Q
  1. What is hyperinflation?
A

very high levels of inflation; rising prices get out of control

32
Q
  1. What is unemployment?
A

When those actively seeking work are unable to find a job.

33
Q
  1. How is unemployment measured? which organization?
A
  • LFS(labour force survey)
  • ILO(international labor organisation)
34
Q
  1. What are the 5 types of unemployment?
A
  • cyclical/ demand deficit unemployment
  • structural unemployment
  • seasonal unemployment
  • voluntary unemployment
  • frictional unemployment
35
Q
  1. What are the 3 types of structural unemployment?
A
  • Sectorial unemployment
  • Technological unemployment
  • Regional unemployment.
36
Q
  1. What is Cyclical/ demand deficient unemployment?
A

unemployment caused by falling demand as a result of a downturn in the economic cycle

37
Q
  1. What is structural unemployment?
A

unemployment caused by changes in the structure of the economy.

38
Q
  1. What is seasonal unemployment?
A

unemployment caused when seasonal workers, such as those in the holiday industry. are laid off because the season has ended.

39
Q
  1. What is voluntary unemployment?
A
  • unemployment resulting from people choosing not to work.
40
Q
  1. What is frictional unemployment?
A
  • when workers are unemployed for a short period of time as they move from one job to another.
41
Q
  1. What is sectorial unemployment?
A

occurs when people are laid off because the industry they work in is in decline.

42
Q
  1. What is technological unemployment?
A
  • occurs when jobs that were previously done by people are now done by machines.
43
Q
  1. What is regional unemployment?
A

unemployment in a particular country is not likely to be the same in all regions.

44
Q
  1. What are the 9 impacts of unemployment?
A
  • levels of output are lower
  • waste of resources which results in lower levels of income
  • Increase in poverty
  • government spending on benefits
  • tax revenue will fall
  • business confidence, no investment
  • consumer confidence
  • to a society.

Economics EDEXCEL IGSCE (13 decks)

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