3.2

Question 1

What is Balance of payments(BOP)?

Answer 1

The amount of the current, financial and capital accounts which account for all trade and financial transactions for a country

Question 2

What is the Circular flow of income?

Answer 2

Model showing the flow of money, factors of production and goods, services in the economy

Question 3

Deflation

Answer 3

A fall in the price level

Question 4

What is the Current account?

Answer 4

The account that records the visible and invisible trades of a county as well as government and paydays

Question 5

What is Disinflation?

Answer 5

Where prices are still rising but at a slower rate

Question 6

What are Exports?

Answer 6

Goods sent to another country in exchange for money

Question 7

What are Factor payments?

Answer 7

Payment made by firms for factors being used, e.g. wages/salaries to employees

Question 8

What are GDP per capita?

Answer 8

GDP divided by the population useful for comparing countries ad reflect changes in population size

Question 9

What is the Gross domestic product(GDP)?

Answer 9

Total value of goods and service produced in a country. Also referred to as economic growth

Question 10

What are Imports?

Answer 10

Goods brought into the country in exchange for money

Question 11

What is Income inequality?

Answer 11

Differences in income that exist between the different groups of earners in society (the gap between the rich and the poor)

Question 12

What is Inflation?

Answer 12

A rise in the price level

Question 13

What are Injections?

Answer 13

Cash flowing into the circular flow of income, e.g. Investment, government spending, exports

Question 14

What are Leakages/withdraws?

Answer 14

Cash flowing out of the circular flow of income e.g. savings, taxes and imports

Question 15

What are Unemployment?

Answer 15

Members of the labour force that are willing and able to work and seeking employment

Question 16

What is Wealth?

Answer 16

Collection of assets(houses, land, shares in companies, money saved in bank accounts)

Question 17

What are the key objectives of macroeconomics? (6)

Answer 17

Price stability, Growth of real GDP, Falling unemployment/ Raising employment, Higher standards of living, Stable balance of payments on the current account, An equitable distribution of income and wealth

Question 18

TIGER

Answer 18

Trade
Inflation
Growth
Employment
Redistribution of income and wealth

Question 19

Additional objectives of macroeconomic policy (6)

Answer 19

Balancing the budget and reducing the national debt, Improving economic well-being, Better regional balance in the UK economy, Improved access to public services, Improved competitiveness, Environmental sustainability

Question 20

What is direct taxation?

Answer 20

A direct tax from income such as corporation or income tax.

Question 21

What is indirect taxation?

Answer 21

A tax on a good or a service.

Question 22

What is a progressive and regressive tax?

Answer 22

Progressive taxes are usually implemented on direct taxes and take a higher % of income for higher earners. Regressive taxes are usually implemented on indirect taxes and take a higher % of income for lower earners.