Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Macro Economics > Chapter 1- Economic Growth And Developmet and balance of payments > Flashcards

Chapter 1- Economic Growth And Developmet and balance of payments Flashcards

1
Q

What factors influence growth and development

A 
Political and institutional factors 
Educational skills 
Infrastructure 
Tehhnology 
Level of poverty 
Income distribution 
Access to credit and bankruptcy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the positive of HDI

A

Able to tell about standard of living through GDP as you are able to see the purchasing power of the people within an economy
See potential productivity of an economy
Able to compare countries internationally
Focuses on more than just expenditure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the negatives of HDI

A

Quality of education not considered
GDP doesn’t include income income inequality and informal employment
Doesn’t consider environmental factors
Countries may focus on these factors and forget about other factors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the 2 types of economic growth

A

Long run economic growth

Short run economic growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is long run economic growth?

A

Increase in productive potential

Movement of PPC

Able to handle growing population

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Define short run economic growth

A

Increase in actual GDP

Measured in terms of rate of change of GDP

Moves towards PPC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is GDP?

A

Total value of output a produced by factors of production over a period of time

Total economic activity by an economy over a period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Why is economic growth a macroeconomic policy?

A

Allows improvement in the quality of life, improves national debt,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who releases the economic stats

A

ONS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the negatives of GDP?

A

Unequal wealth distribution

Environmental damage not considered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Define sustainable development

A

Growth reaching current needs and wants without compromising the needs and wants of the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What percentage of the economy of the service sector account for in the UK?

A

79-80%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is nominal GDP

A

GDP at current market

Not adjusted for inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is real GDP

A

GDP after being adjusted for inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How do you work out real GDP from nominal GDP

A

Real GDP=(Nominal GDP X Base year index)/ current year price index

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Why are index numbers used

A

Used as a means to present and analyse data in sophisticated and straightforward manner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How do you measure index numbers?

A

Index numbers in a year X = (Value in year X / Base year value) X 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Economic growth is measured by

A

Annual percentage change in GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the percentage change equation

A

(New value- Old value)/ Old value X 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Define GDP per capita

A

GDP/ population

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Why is GDP per capita a better measure of economic growth than real GDP?

A

Takes into account population growth effects
Shows how much person should be earning
Doesn’t take into account money distribution
Doesn’t take into account inequality
Doesn’t take into account hidden market or informal economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the problem of GDP

A

Informal economy and hidden economises more recorded

May not have the technology

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Why do developing countries have strong primary sector and cannot move to service lead economy

A

Not enough funds
Lack of skills
No demand for services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Issue with exports of countries mainly being agricultural commodities

A

Competition means low prices so revenue fluctuates and there is a lack of stability

Could lead to exploitations as you don’t have the technology to exploit your own

Natural resources are finite so they will one day run out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What are the MDGs goals

A

Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and promote women
Reduce child mortality
Improve maternal health
Combat HIV/AIDS, malaria and other diseases
Ensure environmental sustainability
Develop a global partnership for development

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What 3 areas did MDGs emphasise?

A

Human capital

Infrastructure and human rights (access to clean water sanitation energy and modern information technology

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

How does political and institutional factors affect growth and development

A

They can promote through making sure property rights and promoting entrupernership and allow subsidies
However others are corrupt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

How does education affect growth and development?

A

Education allows more people to gain jobs in tertiary sector improving the quality of life allowing development

Raises human capital of a population allowing workers to become more productive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

How does infrastructure affect growth and development?

A

Allows movement of goods and services Mean less geographical strains
Attracts FDI
Workers have less geographic immobility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How does technology affect growth and development

A

Allows development in factors of production leading to increased goods and services leading to higher productivity
Also higher quality allowing an increase in price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

How does the level of income distribution affect

A

Severe restraint on economic development as it reduces chances of incentives from the bottom meaning less goods and services bought from the bottom meaning firms don’t fully profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

How does access to credit and banking affect growth and development

A

This is because

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What are the 3 different values of the HDI?

A

High human development= when HDI is above 0.8 and above

Medium Human development- 0.5-0.8

Low human development index- less than 0.5

34
Q

Looks beyond national statistics, wider view of educational opportunities and health as they are also important to the wellbeing of a population

A

A positive of HDI

35
Q

HDI uses index so numbers so you can compare with other countries

A

A positive of HDI

36
Q

What are the strengths of HDI?

A

Looks beyond national statistics, wider view of educational opportunities and health as they are also important to the wellbeing of a population

HDI uses index so numbers so you can compare with other countries

Looks at outcome rather than expanditure

Easy and cheap to collect data

37
Q

Easy and cheap to collect data

A

A positive of HDI

38
Q

Looks at outcome rather than expanditure

A

A positive of HDI

39
Q

Doesn’t take into account income inequality

A

A negative of HDI

40
Q

Only focusing on improving HDI. Reallocation of resources to factors improving HDI has an opportunity cost. Forget about other factors of life like infrastructure

A

Negative of HDI

41
Q

What are the negatives of HDI

A

Only focusing on improving HDI. Reallocation of resources to factors improving HDI has an opportunity cost. Forget about other factors of life like infrastructure

Doesn’t take into account income inequality

Only focuses on 3 aspects of development which is too narrow

Doesn’t take into account the quality of education as more years doesn’t equal better quality

42
Q

Only focuses on 3 aspects of development which is too narrow

A

Negative of HDI

43
Q

Doesn’t take into account the quality of education as more years doesn’t equal better quality

A

Negative of HDI

44
Q

What is the genuine progress indicator

A

More comprehensive measure of economic development compared to HDI. 26 indicators in 3 groups

45
Q

What is in the economic group for genuine progress indicator

A

Inflation unemployment taxing economic growth income inequality national minimum wage interest wage national debt and government spending

46
Q

What is the environmental factors for the genuine progress indicator?

A

Pollution air water quality noise deforestation reduce biodiversity plus poor air quality manufacturing and natural disasters

47
Q

What are the social factors on the genuine progress indicator?

A

Quality of education, health care, housing, crime rates, work life balance, relationships, infrastructure, housing costs, corruption.

48
Q

What are the strengths of the genuine progress indicator?

A

Considers full range of factors that affect welfare

short-term and long-term

49
Q

What are the disadvantages of the genuine progress indicator?

A

Difficult to count calculate measurement errors can occur

50
Q

Define balance of payments

A

Set of accounts showing the transaction conducted between a country and the rest of the world

51
Q

What are the functions of balance of payments

A
  1. Keep records of funds show surplus (More money coming in more injections than leakages)Shows deficit (More leakages/more money leaving then coming in)
  2. Tells us about the demand and supply of goods. Gives us an idea for the demands of currency because if increasing demand means higher price in their own money
52
Q

Why is this an ever increasing and relevant objective in the

A

Due to globalisation, Trading at a much larger scale inputs and exports can have a massive impact on unemployment and economy. Economic growth will slow down when they are much more Xbox which means more money leaves in the circular flow of income which lead to unemployment

Great to interconnectedness of global economy along for great exchange of goods and services. Greater ownership and establishment of firms in one country by economic factors in another country. Economic growth and unemployment dependent on satisfaction balance of payment

53
Q

What are the four components of balance of payments

A

The current account, The financial accounts and the capital account

54
Q

What is the current account

A

Measure of flow of funds from trade in goods and services plus other income flows divided into four parts

55
Q

What are the four parts of current account?

A

The balance of trade in goods, the balance of trade in service, net investment income/primary income, current transfers/secondary income.

56
Q

What is the balance of trade in goods?

A

Known as visible trade. Balance of trade in goods represents actual tangible products

57
Q

What is the balance of trade in services?

A

Known as invisible trade. Represents intangible items examples include banking, finance, insurance, telecommunications, transport and tourism

58
Q

What part of the balance of payments is balance of trade in goods in?

A

Current account

59
Q

What part of balance of payments is balance of trade in services in?

A

Current account

60
Q

What part of balance of payments is net investment income in?

A

Current account

61
Q

What part of balance of payments is current transfers/secondary income in?

A

Current account

62
Q

What is net investment income/primary income

A

Movement of shares divided interest profits and migrant remittances

63
Q

What is current transfer/secondary income

A

Transfers made by the government no goods and services change hands for example to foreign aid

64
Q

What is the financial account?

A

Measures net change in foreign ownership of the Mestic financial assets

65
Q

What happens if Foreign Ownership of the Mestic financial assets increase more quickly than domestic ownership of foreign financial assets

A

More money coming into the country then going out so there is a financial accounts are plus

66
Q

What happens if domestic ownership of foreign financial assets increases more quickly then foreign ownership of domestic financial assets

A

More money going out of the country then coming in so there is a financial account deficit

67
Q

What is the financial account made up of?

A

Direct investment, portfolio investment, reverse assets.

68
Q

What is direct investment

A

Long-term assets where the purchases aiming to gain a lasting interest in the company for production purposes

69
Q

What is portfolio investment

A

Purchases of stocks shares and bonds

70
Q

What is reverse assets

A

Official reverse of foreign currencies and Gold Held by banks

71
Q

What is the capital account

A

Small and insignificant. Made of two components doesn’t have a significant effect on the balance

72
Q

What part of the Balance of payments is direct investment in

A

Financial account

73
Q

What part of the Balance of payments is portfolio investment in

A

Current account

74
Q

What part of the Balance of payments is reverse assets in?

A

Current account

75
Q

What is capital transfers?

A

Measure of net money Movements that most of them come as a result of migrants moving assets from one country to another

76
Q

What part of the. Balance of payments is capital transfers in

A

Capital account

77
Q

What is transactions in non-produce non-financial assets

A

Most commonly the source of things such as land in natural resource right and copyright

78
Q

Define GNI per capita

A

GPD plus net income from abroad expressed as an average per person

79
Q

What is GNI?

A

GDP does not consider income from abroad. This provides us with an accurate account as to the total amount of output a country produces As this includes all parts of income a country receives.

80
Q

What is the positive of GNI?

A

Provide an accurate account of the standard of living As higher GNI suggests that there is no more disposable income amongst the population meaning that they can afford more goods and services meaning a higher utility

More useful for developing countries as they receive most of the income from abroad

Allows comparison

81
Q

What are Negatives of GNI?

A

Doesn’t account for income inequality, doesn’t talk about the environment,Doesn’t look at informal sector

82
Q

Define human development index?

A

Composite indicator of development within an economy measured on a scale of 1 to 0

Macro Economics (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions