Government Objectives Flashcards
Name 2 government objectives
Growing the economy
Reducing inflation
Creating jobs
Managing trade with other countries
What’s economic growth?
The rate of change in the level of an economy’s output from period to period.
What is GDP?
A measure of the total value of what is produced in an economy.
What’re some problems of economic growth?
- Congestion
- Increased population
- Pollution
What’s inflation?
A measure of the general rise in the price level throughout the economy expressed as a percentage.
What is the UK Gov’s policy for inflation?
To keep it both low and stable.
2%.
What’s unemployment?
Unemployment occurs when a person who is activelysearching for employmentis unable to for work.
Name 2 causes of unemployment
Cyclical (demand-deficient)
Structural
Seasonal
Frictional (or Search)
Classical (or real wage)
What’s cyclical unemployment?
This occurs when demand through the economy is low.
What’s structural unemployment?
When the structure of the economy changes.
Eg, when there’s no need for a particular job.
What’s frictional unemployment?
When people have left one job and are looking for another.
What’s seasonal unemployment?
Unemployment based upon the season.
What is classical unemployment?
Unemployment when the real wage remains too high for equilibrium.
What’s the balance of payments?
The Balance of Payments records all transactions between the residents of that country and the rest of the world.
