4.2.1 The Meausremy Of Macroeconomic Performance Flashcards

1
Q

What are the 4 main macroeconomic objectives?

A
  • Economic growth
  • minimising unemployment
  • price stability
  • Stable balance of payments on current account
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2
Q

Why is it hard to have economic growth without inflation?

A

Price level will increase
As AD will increase faster than AS

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3
Q

Why is it hard to have economic growth without damaging the current account?

A
  • High levels of spending from consumers
  • high marginal propensity to import (depending on country)
  • more spending on imports
  • worsening of the current account deficit
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4
Q

Philips curve for a trade-off between unemployment and inflation

A
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5
Q

What is GDP?

A

A measure of the quantity of goods and services produced in an economy

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6
Q

What is REAL GDP?

A

% economic growth - % inflation

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7
Q

What is real GDP per capita?

A

Average output per person in an economy

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8
Q

What are Consumer Price Index and Retail Prices Index?

A

Measures of inflation
CPI - measures household purchasing power
RPI - measures cost of living and wage escalation

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9
Q

What are the 2 measures of unemployment?

A
  • The Claimant Count
  • The UK Labour Force Survey
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10
Q

How do we know productivity is increasing?

A

More output can be produced with fewer units of input

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11
Q

What is the balance of payments?

A

A record of all financial transactions made between consumers, firms and the government from one country with other countries
- expenditure on imports
- value on exports

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12
Q

What are exports?

A

Goods and services sold to foreign countries
Creating an inflow of money to the current account

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13
Q

What are imports?

A

Goods and services bought from foreign countries
Creating an outflow of money from the current account

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14
Q

What is the current account on the balance of payments?

A

The balance of trade in goods and services

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15
Q

Index number calculation

A
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16
Q

When does economic growth occur?

A

When there is a rise in the value of GDP

17
Q

What is nominal GDP?

A

The value of GDP without inflation being accounted for

18
Q

What is total GDP?

A

The combined monetary value of all goods and services produced within a country’s borders during a specific time period

19
Q

How can national income be measured?

A

GNI

20
Q

Formula for GNI?

A

GDP + (X-M)