Economic growth etc

Question 1

name four macroeconomic goals

Answer 1

• high levels of economic growth
• full employment
• low inflation
• balance of payments equilibrium
• climate change goals
• prevent income inequality

Question 2

economic cycles

Answer 2

slump/through < recovery/expansion < boom/peak > downturn/contraction

Question 3

fiscal policy

Answer 3

– increase or decrease in government spending, pay
out subsidies or grants to businesses, stimulus checks

Question 4

monetary policy

Answer 4

Applied by a country’s Central Bank
increase or decrease key/statutory interest rates (on bank loans)
- print money (to increase money supply)

Question 5

difference salary and wages

Answer 5

• salary is a fixed payment, usually on a monthly or annual basis
• wages are typically based on an hourly rate and can vary depending on the number of hours worked.

Question 6

withdrawals/leakages

Answer 6

money is not immediately passed on to domestic businesses

Question 7

injection

Answer 7

income generated by exports etc.

Question 8

what factors help to boost growth?

Answer 8

1. technological advances
2. improvement in human capital
3. accumulation in human capital
4. discovery of natural resource like oil

Question 9

RPI?

Answer 9

Retail price index, measures inflation in the UK

Question 10

cost-push inflation?

Answer 10

factors on the supply side of the economy –> production costs rise, passed on to the consumers

Question 11

demand-pull inflation

Answer 11

overall demand for goods surpasses its productive capacity

Question 12

Keynesian approach

Answer 12

combination of monetary and fiscal policies:
- personal income taxes may be increased
- public spending might be cut

Question 13

monetarist approach

Answer 13

curb growth of the money supply:
- reducing government spending
- hence the Public Sector Borrowing Requirement
- hike interest rates

Question 14

labour market regidities

Answer 14

1. workers demand excessive increases in real wages
2. excessively high unemployment benefits increase the number of workers unemployed at any given time

Question 15

eligible

Answer 15

berechtigt

Question 16

what are factors of production?

Answer 16

land, labour, capital, entrepeneur: Resources used to produce goods and services

Question 17

What are factor payments?

Answer 17

Factor payments are what the firm pays for the use of the factors of production

Question 18

how do businesses and households interact?

Answer 18

businesses use factors of production that are provide to them by households. In return, households are paid for providing these factor inputs = factor income
this is referred to as rent, wages, interests or profit