Economic growth etc Flashcards
name four macroeconomic goals
- high levels of economic growth
- full employment
- low inflation
- balance of payments equilibrium
- climate change goals
- prevent income inequality
economic cycles
slump/through < recovery/expansion < boom/peak > downturn/contraction
fiscal policy
– increase or decrease in government spending, pay
out subsidies or grants to businesses, stimulus checks
monetary policy
Applied by a country’s Central Bank
increase or decrease key/statutory interest rates (on bank loans)
- print money (to increase money supply)
difference salary and wages
- 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.
withdrawals/leakages
money is not immediately passed on to domestic businesses
injection
income generated by exports etc.
what factors help to boost growth?
- technological advances
- improvement in human capital
- accumulation in human capital
- discovery of natural resource like oil
RPI?
Retail price index, measures inflation in the UK
cost-push inflation?
factors on the supply side of the economy –> production costs rise, passed on to the consumers
demand-pull inflation
overall demand for goods surpasses its productive capacity
Keynesian approach
combination of monetary and fiscal policies:
- personal income taxes may be increased
- public spending might be cut
monetarist approach
curb growth of the money supply:
- reducing government spending
- hence the Public Sector Borrowing Requirement
- hike interest rates
labour market regidities
- workers demand excessive increases in real wages
- excessively high unemployment benefits increase the number of workers unemployed at any given time
eligible
berechtigt
what are factors of production?
land, labour, capital, entrepeneur: Resources used to produce goods and services
What are factor payments?
Factor payments are what the firm pays for the use of the factors of production
how do businesses and households interact?
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
