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Econ Unit 1 + Macroeconomics > Economics test - Macroeconomics, economic growth, and inflation > Flashcards

Economics test - Macroeconomics, economic growth, and inflation Flashcards

1
Q

Macroeconomics definition

A

Studies the economy as a whole and look at economic indicators

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2
Q

The circular flow model

A

Is a macroeconomic diagrammatic model that describes the flow of resources, goods and services, and income (real and money) between sectors of the economy such as the household, government, firm, overseas, financial sectors.

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3
Q

Two flows

A

Real flow and money flow

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4
Q

Real flow

A

is flow of good and services and resources

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5
Q

Money Flow

A

is the flow of spending and income

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6
Q

Factor Market

A

Firms exchange income in return factors of production to households

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7
Q

Microeconomics definition

A

Refers to individual market

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8
Q

Macroeconomic equilibrium

A

The sum of all the leakages (S+T+M) in the economy equals the sum of all injections (I+G+X)

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9
Q

GDP def

A

Measures the total value of all final goods and services produced in an economy in a year

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10
Q

Expenditure method of calculating GDP

A

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

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11
Q

Input?

A

Input refers to the resources or factors of production used in the production of a firm’s output

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12
Q

Income method of calculating GDP

A

Calculates GDP based on the total earnings of individuals, business and government.

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13
Q

Transfer Payments

A

Welfares and Grant

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14
Q

Current Expenditure

A

Spending on public servants

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15
Q

Capital Expenditure

A

Services like schools, hospitals, roads etc.

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16
Q

Real GDP

A

GDP adjusted for inflation

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17
Q

Economic growth. Indication?

A

Increase in the productive capacity of an economy over time. Indicated by increased standard of living.

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18
Q

Economic growth equation

A

Change in GDP/Original GDP x 100

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19
Q

Factors affecting consumption

A

Interest rates
Disposable Income
HH Expectations and Confidence
Stock of Wealth
Taxation

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20
Q

Investment affecting factors

A

Interest rates
Business Confidence and Expectation
Past profits
Taxation

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21
Q

Gvt expenditure factors

A

Govt policy

22
Q

Next exports factors

A

Economic Growth of Trading Partner

Price of commodities

Domestic economic growth

Gov’t policy

23
Q

Price Stability

A

Refers to low rates of inflation

24
Q

Full employment

A

Occurs when everyone who is willing and able to work can find paid employment.

25
Q

Standard of living

A

Material measure

26
Q

Welfare

A

Refers to wellbeing and happiness

27
Q

Aggregate Expenditure

A

The total planned spending on final goods and services in an economy.

28
Q

Non-durable goods

A

Those that are consumed quickly after purchase

29
Q

Durable Goods. Percentage or spending

A

Can be expected to last 3 or more years. 10%

30
Q

Largest component of spending

A

Services. 70%

31
Q

Nominal GDP

A

is the value of output expressed in the prices of the day

32
Q

Natural Resources are called?

A

Commodities

33
Q

Inflation definition

A

Inflation is the persistent and appreciable rise in the general price of G&S.

34
Q

CPI

A

Measures changes in the prices of a basket of goods and services bought by Australian Households

35
Q

CPI weightings

A

The goods that are the highest weighting have the highest proportional spending of disposable household income

36
Q

Headline inflation

A

Normal inflation, goods with volatile prices are accounted.

37
Q

Underlying inflation

A

Removes irregular or extreme price movements

38
Q

Two types of underlying measures

A

Trimmed mean and weighted median

39
Q

Demand pull inflation

A

Prices can increase when there are high levels of demand but not enough supply

40
Q

Cost-push inflation

A

Prices can increase when rising cost of production is pushed to consumers

41
Q

What is environmental sustainability?

A

Focuses on the conservation and protection of natural resources and ecosystems.

42
Q

Social sustainability

A

Involves a discussion of the distribution of the proceeds of
growth between all individuals and communities

43
Q

Economic sustainability

A

Refers to developing a thriving economy that provides long-term and efficient use of resources.

44
Q

Aggregate production function model

A

Real GDP on y-axis, labor force on x axis

45
Q

Labour force

A

Sum of people in an economy that are able to work

46
Q

Why does the real GDP not increase exponentially according to the labor force in the APF

A

Law of diminishing returns

47
Q

What would happen to the APF model if capital or technology, or education, or quality increases

A

The curve would move upwards

48
Q

Sustainable economic growth

A

Is growth that can be sustained without major economic problems

49
Q

Unemployment target

A

5-6%

50
Q

inflation target

A

2-3%

51
Q

Economic growth

A

4-5%

52
Q

CPI formula

A

(CPI 2/CPI 1 - 1) x 100

Econ Unit 1 + Macroeconomics (13 decks)

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