Economic Growth

Question 1

What does TIGEER stand for?

Answer 1

Trade
Inflation
Economic growth
Employment / Unemployment
Environment
Redistribution of income

Question 2

What’s the circular flow of income

Answer 2

An economic model showing how money flows through the economy, between firms and consumers

Question 3

What are the leakages in the circular flow of income?

Answer 3

Savings
Taxation
Imports

Question 4

What are the injections in the circular flow of income?

Answer 4

Investment
Govt. Spending
Exports

Question 5

What’s gross domestic product?

Answer 5

The monetary value of all goods and services produced in an economy in a certain time period

Question 6

What are the pros of measuring GDP?

Answer 6

Measures economic growth
Measure of living standards

Question 7

What are the cons of measuring GDP?

Answer 7

The ONS are double counting
The shadow economy
It’s hard to measure the service industry
Potential errors in data collection

Question 8

What’s economic growth?

Answer 8

An increase in real GDP in an economy in a year

Question 9

What’s short run economic growth?

Answer 9

Where we stimulate the components of aggregate demand.

Question 10

What’s long run economic growth?

Answer 10

Where we improve the productive potential of an economy

Question 11

What’s aggregate demand?

Answer 11

The real planned expenditure on goods and services within an economy

Question 12

What are the components of aggregate demand?

Answer 12

AD = C + I + GS + (X - M)

Question 13

How is short run economic growth increased?

Answer 13

Lower interest rates
Lower income/corporation tax
Higher confidence
Higher government spending
Weaker exchange rate

Question 14

How is long run economic growth increased.

Answer 14

Increased Q2CELL
Increased productive efficiency

Question 15

What’s the economic cycle?

Answer 15

Fluctuations in real GDP that an economy goes through over time

Question 16

What’s a boom?

Answer 16

Positive economic growth, measured by real GDP, where we have a positive output gap but the economy could be overheating

Question 17

What’s a recession?

Answer 17

Negative growth over two consecutive quarters

Question 18

What’s a slump?

Answer 18

Where there’s a large fall in real GDP, creating a negative output gap, with fear of deflation or depression

Question 19

What’s a recovery?

Answer 19

Where real GDP starts to grow, showing positive signs for the economy

Question 20

What are the positives of economic growth?

Answer 20

Higher disposable income
Higher employment
Higher profits for firms
Increased tax revenues for the Government (fiscal dividends)

Question 21

What are the negatives of economic growth?

Answer 21

Demand pull inflation
Income inequality
Environmental costs
Current account defecit

Question 22

What are the evaluations of economic growth?

Answer 22

Is growth sustainable?
Is growth inclusive?
Is growth balanced?
There’s a role for the private sector and the government.

Question 23

What’s the definition of unemployment?

Answer 23

People who are willing and able to work and actively seeking work but don’t currently have a job.

Question 24

What does the labour force survey (LFS) measure?

Answer 24

People who are employed, unemployed and economically inactive

Question 25

How is unemployment rate calculated?

Answer 25

(Unemployed / Economically active) * 100

Question 26

What’s the claimant count?

Answer 26

A measure of the total number of people that are claiming unemployment benefits

Question 27

What are the downsides of the claimant count?

Answer 27

It’s difficult to compare between countries
Not everyone will claim
Not everyone can claim
Could be subject to fraud

Question 28

What are the problems with the LFS?

Answer 28

Sampling errors
Expensive to measure
Discouraged workers
Inactive groups
The under-employed
Disparities

Question 29

What’s cyclical unemployment?

Answer 29

Unemployment caused by fluctuations in the economic cycle

Question 30

What’s structural unemployment?

Answer 30

Unemployment due to shifts in an economy

Question 31

What’s frictional unemployment?

Answer 31

Occurs when workers are between jobs

Question 32

What’s seasonal unemployment?

Answer 32

When workers have work dependant on the season.