Booklet 1 - Macro Flashcards
Definition - output method
Add up the value of all the goods and services produced by firms
Definition - expenditure method
Add up the value of everything bought by households
Definition - income method
Add up all incomes
Definition - closed economy
An economy with no international trade
Definition - income
A flow variable, received over time
Definition - wealth
A stock variable, values someone’s assets
Definition - leakage
Money that leaves the circular flow of income
Definition - injection
Money that is added to the circular flow of income
Definition - gross domestic product (GDP)
The total value of goods and services produced in a country in a year
Definition - nominal data
Actual numerical values
Definition - real data
Constant prices in order to remove the impact of inflation
What are the 4 main objectives of government macroeconomic policy ?
- sustainable economic growth
- price stability (low inflation)
- minimising unemployment
- stable balance of payments on current accounts
What are the secondary objectives of government macroeconomic policy ?
- maintain a balanced budget
- achieve gender equality in the distribution of income
- protect the environment
