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Economics > Chapter 9 - Measurement of macroeconomic performance > Flashcards

Chapter 9 - Measurement of macroeconomic performance Flashcards

1
Q

What are the four sectors (economic agents) the economy is made up of

A

Households
Firms
Government (the public or state sector)
International (e.g consumers buying overseas products (M) and Foreigners buying UK products (X) )

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2
Q

What do households do for the economy

A

They receive payments (income) for their services (eg labour and land) and use this money to buy the output of firms (i.e consumption or household spending).

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3
Q

What do firms do for the economy

A

They use land labour and capital to produce goods and services for which they pay wages rent etc (income) and receive payment (expenditure)

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4
Q

What is macroeconomics

A

the performance of the economy as a whole

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5
Q

What is GDP (Gross domestic product)

A

The monetary value of all goods and services produced within the UK in a given time period

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6
Q

What is real GDP

A

The volume of goods and services produced within the UK (i.e. GDP adjusted for changes in the price level)

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7
Q

What is economic growth

A

The percentage rate of increase of real GDP

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8
Q

What is inflation

A

a general rise in the average price level.

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9
Q

Examples of microeconomics

A
  • Recession in the tourist industry due to the global downturn
  • A government subsidy to steel producers
  • A recession in the textiles industry
  • Increased spending on the National Health Service
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10
Q

Examples of macroeconomics

A
  • Strong economic growth arising from high levels of consumer spending
  • A fall in exports because of a recession in leading European markets
  • Higher interest rates to curb inflationary pressure
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11
Q

What are the main objectives of a government

A

TIGERS (Trade, Inflation, Growth, Employment, Redistribution, Sustainability)

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12
Q

The 4 main objectives of government policies

A
  • Economic Growth
  • Maintain Full Employment / Low Unemployment
  • Limit or control inflation
  • Achieve a satisfactory balance of payments
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13
Q

What is an objective

A

A target or goal that policy makers aim to hit.

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14
Q

What is an instrument

A

A tool or set of tools used to try to achieve a policy objective.

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15
Q

What is short-run economic growth

A

Growth of Real output resulting from using idle resources

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16
Q

What is long-run economic growth

A

An increase in the economy’s potential level of real output

17
Q

What is full employment

A

Beveridge Definition: 3% or less of the labour force unemployed.

Free-market definition: The level of employment occurring at the market-clearing real-wage rate.

18
Q

What is the claimant count

A

people who are claiming unemployment related benefits

19
Q

What is the labour force survey

A

A quarterly sample survey of households in the UK. Its purpose is to provide information on the UK labour market.

20
Q

What is deflation

A

a persistent or continuing fall in the average price level.

21
Q

What is disinflation

A

when the rate of inflation is falling, but still positive. E.g. prices were rising by 5% but although still rising they are only now rising by 2%.

22
Q

How do you measure inflation

A

CPI (Consumer price index) - the official measure

RPI (Retail price index) - The older UK measure

23
Q

What is the balance of payments

A

a record of all the currency flows into and out of a country in a particular time period.

24
Q

What are the 2 main sections of the Current Account of the Balance of Payments

A

The money value of Exports and the money value of Imports. (also known as The balance of trade)

25
Q

What is trade surplus

A

exports are greater than imports

26
Q

What is budget deficit

A

imports are greater than exports

27
Q

What is a trade-off

A

involves sacrificing some of X to get more of Y

28
Q

What is the main aim of a government policy

A

increase the economic welfare of the whole country.

29
Q

What are some conflicts of Full employment and economic growth

A

Inflation and a Satisfactory Balance of Payments

30
Q

What is a conflict of economic growth

A

Greater income equality

31
Q

What is a conflict of current living standards

A

Future living standards

32
Q

What are lag indicators

A

Shows the recent performance of the economy. E.g. GDP Data, Unemployment Data, Current Account Data.

33
Q

What are lead indicators

A

Give an indication of where the economy is heading. E.g. Survey of consumer & business confidence, Holidays pre-booked.

34
Q

What is an index number

A

a figure reflecting price or quantity compared with a standard or base value. (The base value has an index number of 100 always)

Economics (11 decks)

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