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AS Level Macro-Economics > aaa > Flashcards

aaa Flashcards

1
Q

What are the 6 main government economic objectives?

A
  • Stable prices
  • Steady Economic Growth
  • Full employment
  • Favourable Balance of Payments
  • A fairer distribution of income and wealth
  • Reducing government budget deficit and national debt
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2
Q

What are the 4 factors of production?

A

Land, Labour, Capital and Enterprise.

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3
Q

What are the 3 main methods of calculating national income / Gross Domestic Product?

A

The income, expenditure and output method.

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4
Q

How do we use the Income Method to calculate GDP?

A

Wages, Rent, Interest and Profits/Dividends

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5
Q

How do we use the Expenditure Method to calculate GDP?

A

Consumption, Investment Spending, Government Spending and Net Exports.

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6
Q

How do we use the Output Method to calculate GDP?

A

Primary ( Farming ), Secondary ( Manufacturing ) , Tertiary ( Services ) and Quaternary ( Info / Data )

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7
Q

How can we reduce government deficit?

A

Borrow, surplus from previous years and to sell assets.

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8
Q

What is the circular flow of income?

A

A diagram showing how variants from income go back and forth between firms and households with injections coming into it and withdrawals coming out of it.

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9
Q

What goes from households to firms in the circular flow of income?

A

Consumer expenditure and the factors for production.

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10
Q

What goes from firms to households in the circular flow of income?

A

Wages, rent, dividends, interest and goods and services.

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11
Q

What are the injections coming into the circular flow?

A

Government Spending (G), Bank loans for investment (I) and Exports (X)

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12
Q

What are the withdrawals coming out of the circular flow?

A

Taxation (T), Savings (S) and Imports (M)

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13
Q

What is the Macro-Economic Consumption Function?

A

Aggregate Demand (AD) = Consumer Spending (C) + Business Spending (I) + Government Spending (G) + (Exports - Imports [X-M])

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14
Q

What is on the y-axis of The Economic Cycle?

A

Employment, Income, Spending, Output, Gross Domestic Product, Economic Activity

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15
Q

What is on the x-axis of The Economic Cycle?

A

Time

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16
Q

What are the main four stages of The Economic Cycle?

A

Downturn, Peak/Boom, Recession/Trough/Slump and Recovery

17
Q

What does the dotted line through the Economic Cycle represent?

A

The Trend Rate of Growth

18
Q

What is the target for trend rate of growth on the Economic Cycle?

A

The Target is 2.25% per annum

19
Q

What is the Economic Cycle also referred as?

A

The Trade Cycle or the Business Cycle

20
Q

How can we look out for signs of an economic downturn (8 points)?

A
  • Rising unemployment
  • Falling Aggregate Demand - IR changes
  • Reduced output
  • Falling tax revenues
  • Increased government spending on benefits
  • Order books of firms get emptier
  • Stock market falls
  • Reduced consumer confidence and spending
21
Q

Define interest rates.

A

Interest rates are the costs of borrowing money and the reward for saving money

22
Q

Define tariffs.

A

Tariffs are the taxes placed on imports

23
Q

Define the saying ‘SPICED’.

A

Stronger Pound Imports Cheaper Exports Dearer

24
Q

Define Aggregate Demand.

A

Aggregate demand is the total level of planned real expenditure on UK produced goods and services

25
Q

Define what the Aggregate Demand Curve shows.

A

It shows the level of planned demand for real output is consistent with a particular price level.

26
Q

What is net imports otherwise known as?

A

The current account balance of the balance of payments.

27
Q

What is government spending?

A

Expenditure by central and local government on goods and services - this does not include welfare benefits.

28
Q

What are the factors affecting Consumer Spending in Aggregate Demand?

A
  • Interest rates
  • Income - Income Tax
  • Consumer Confidence
  • Stage of the Economic Cycle
29
Q

What are the factors affecting Business Spending in Aggregate Demand?

A
  • Interest Rates
  • Level of Spare Capacity in the Economy
  • Stage of the Economic Cycle
  • Business Confidence
30
Q

What are the factors affecting Government Spending in Aggregate Demand?

A
  • Stage of the Economic Cycle

- Government Priorities

31
Q

What are the factors affecting Exports in Aggregate Demand?

A
  • Levels of Tariffs Overseas
  • Stage of the Economic Cycle Overseas
  • Exchange Rates
32
Q

What are the factors affecting Imports in Aggregate Demand?

A
  • Stage of the Economic Cycle Domestically

- Tariffs Domestically

33
Q

What is the demand for labour derived from?

A

The demand for labour is derived from the demand for the goods and services that labour produces.

AS Level Macro-Economics (1 decks)

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