chapter 9 macro: the measurement of macroeconomic performance Flashcards
1
Q
what are 5 government objectives
A
- limit or control inflation/achieve price stability
- achieve economic growth
- improve standard of living and level of economic welfare
- maintain full employment/low unemployment
- satisfactory balance or payments
2
Q
what is short run economic growth
A
- taking up slack in the economy
- using the unemployed resources
3
Q
what is long run economic growth
A
- the increase in economic potential
- shown by an outward shift in the PPF
4
Q
what is nominal GDP
A
GDP measured at the current market prices, without removing the effects of inflation
5
Q
what is real GDP
A
a measure of all the goods and services produced in an economy, adjusted for price changes or inflation
6
Q
which economic objectives were prioritised from after WW2 and why
A
- to achieve economic growth
- improve standard of living and level of economic welfare
- create and maintain full employment/low unemployment
- limit or control inflation/achieve price stability
- attain a satisfactory balance or payments
7
Q
which economic objectives were prioritised from the 1980s and why
A
control of inflation was the top priority because it spiralled out of control in the 1970s so the government changed economic objectives from from full employment to controlling inflation
8
Q
why did economic objectives change in the 1980s
A
- in the 1980s, Margaret Thatcher became the new prime minister and the UK government was now pro-free market, opposing Keynesian views
9
Q
what are the four main conflicting policies
A
- full employment or satisfactory balance of payments
- full employment or controlling inflation
- economic growth or equal distribution of income
- improvement in living standards now or in the future
