Economic Growth

Question 1

What affects economic growth

Answer 1

Investment
Consumption
Unemployment
Inflation
Income and wealth

Question 2

What affects international trade?

Answer 2

Balance of payments
Specialisation
Exchange rates

Question 3

How to measure economic growth

Answer 3

GDP

Question 4

How to measure price stability

Answer 4

Inflation

Question 5

Exports>imports=

Answer 5

Current account surplus

Question 6

Imports>exports

Answer 6

Current account deficit

Question 7

Benefits of economic growth

Answer 7

Job creation
Improved sol
Improved confidence for investors
Rising incomes

Question 8

What is GDP

Answer 8

The value of all finished goods and services for a country

Question 9

A problem with GDP

Answer 9

Does not include domestic activity and informal economy

Question 10

Inflation

Answer 10

Rate of change of average prices in an economy

Question 11

Recession

Answer 11

2 consecutive falls in GDP

Question 12

Deflation

Answer 12

Fall in price levels

Question 13

Disinflation.

Answer 13

Rate of increase of inflation is falling

Question 14

Nominal GDP

Answer 14

All spending

Question 15

Real GDP

Answer 15

Take out the effect of inflation.

Question 16

Real GDP equation

Answer 16

Real GDP = nominal gdp
——————
Deflator

Question 17

What is gdp per head

Answer 17

Total gdp of a country divided by the population

Question 18

What does gdp per head show

Answer 18

Average income

Question 19

Why is unemployment a problem

Answer 19

A major waste of resources

Question 20

Benefits of low unemployed

Answer 20

Higher incomes
Lower government spending on benefits
Reduced poverty
Higher tax revenue for government

Question 21

What is gni

Answer 21

Total amount of money earned by a nations people and businesses inside and outside the country.

Question 22

Why is it hard to compare income for 2 diff countries

Answer 22

Currency fluctuations
Corruption
Changes in population

Question 23

What is PPP

Answer 23

Rate a currency of one country would have to be converted into that if another country o buy the same amount of goods

Question 24

Advantage of PPP

Answer 24

Exchange rates are stable compared to market rates.

Question 25

Disadvantage of PPP

Answer 25

Large amount of data must be collected

Question 26

What does the national happiness index measure

Answer 26

GDP per capita Life expectancy generosity Corruption

Question 27

Aggregate demand

Answer 27

Total level of planned real expidenture on goods and services produces in a country

Question 28

Components of aggregate demand

Answer 28

Consumption Investment Government spending Exports-imports

Question 29

Interest

Answer 29

Cost of borrowing/reward for saving

Question 30

What causes AD to shift left

Answer 30

Decreased consumer spending Decreased confidence Increased unemployment Decreased government spending

Question 31

What shifts AD to right

Answer 31

Increased investment Increased government spending Increased level of saving

Question 32

Aggregate supply

Answer 32

Quantity of goods and services that producers in an economy are willing and able to supply at a given level of prices

Question 33

What makes AS shift left

Answer 33

Increased raw material costs Increased wage costs Increased vat and other taxes

Question 34

What makes AS shift right

Answer 34

increased labour productivity Increased government subsidies Decreased exchange rate changes

Question 35

What is gnp?

Answer 35

Measure of all wealth created by a country including all income generated and spent by citizens abroad