Economic Objectives

Question 1

Main objectives of uk economy

Answer 1

Economic growth 
Stable prices
Low unemployment 
Balance of payments 
Fairer distribution of income

Question 2

Economic growth causes?

Answer 2

More economic activity

Question 3

How is economic activity measured

Answer 3

By GDP

Question 4

Price increases and stable prices measured by

Answer 4

Inflation rate

Question 5

Governments aim for inflation

Answer 5

2%

Question 6

What is considered full employment

Answer 6

4%

Question 7

Why is economic growth desirable

Answer 7

Higher employment
Higher disposable income
Better quality of life

Question 8

Why economic growth can be bad

Answer 8

Lead to inflation
Greater inequality
Less opportunities available

Question 9

Determinants of C

Answer 9

RDI
Wealth
Consumer confidence 
Age structure of population 
Inflation 
Rate of interest

Question 10

What does a fall in interest rates cause

Answer 10

Rise in consumer expenditure:
Borrowing is cheaper
Reduced incentive to save
Reduced mortgage repayments

Question 11

Determinants of I

Answer 11

RDI 
Rate of interest 
Business confidence 
Technology 
Taxes/regulations

Question 12

Determinants of G

Answer 12

Economic activity level
Politics- austerity
Emergencies

Question 13

Determinants of X and M

Answer 13

RDI abroad
RDI at home
Domestic price level
Exchange rate

Question 14

What is on the Y axis of AD curve

Answer 14

Price level

Question 15

What is on the X axis of AD curve

Answer 15

Real GDP

Question 16

what is economic structure

Answer 16

describes the changing balance of output, trade, incomes and unemployment

Question 17

3 types of industry

Answer 17

primary- extracting
secondary- manufacture
tertiary- selling

Question 18

equation for AD

Answer 18

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

Question 19

what is consumer spending

Answer 19

spending by households on goods and services

Question 20

what is investment

Answer 20

money spent on assets with the intention of increasing future profits

Question 21

what is government expenditure

Answer 21

spending by government on state provided goods and services- schools, hospitals

Question 22

subsidies

Answer 22

money granted by the state to keep prices low

Question 23

demand

Answer 23

the quantity of a good or service that people are willing and able to buy at a certain price

Question 24

disposable income

Answer 24

spending after tax

Question 25

real income

Answer 25

spending after removing distorting effects of inflation

Question 26

Average propensity to consume

Answer 26

the proportion of disposable income spent

Question 27

wealth

Answer 27

stock of assets