6.1.1 - GOV OBJECTIVES Flashcards
1
Q
4 gov objectives
A
- Low inflation
- Low unemployment
- Positive balance of payments
- Economic growth
2
Q
Inflation
A
the increase in average price level of goods+services over time
3
Q
unemployment level
A
the proportion of the population that is capable of working but could not find a job
4
Q
GDP
A
value of all goods and services produced by a country in 1 year
5
Q
Balance of payments
A
difference between value of exports and imports of goods and services over one year in a country
6
Q
Why gov wants low inflation
A
- so people can afford their needs and wants, increases standard of living
- business will have lower costs = easier to expand
- Lower prices will be more appealing than foreign goods prices
7
Q
Why inflation is a problem
A
Wages may not increase as much as the inflation level, so real income decreases
8
Q
Why gov wants low unemployment
A
- More people will contribute to GDP = higher GDP
- receive income tax
- improves peoples living standard
9
Q
Why gov wants economic growth
A
- usually improves standards of livings
- Reduces unemployment as higher output = more jobs needed
10
Q
Why gov wants positive balance of payments
A
- less need to borrow from other countries
- more favorable exchange rates - appreciation
