Interim

Question 1

Gross Domestic Product (GDP)

Answer 1

Measures the quantity of goods and services produced in an economy

Question 2

Real {statistic}

Answer 2

The statistic is adjusted for inflation

Question 3

Inflation

Answer 3

the rate of change of average prices in an economy - measured by the Consumer Price Index (CPI)

Question 4

Unemployment Rate

Answer 4

is the percentage of people in the labour force without a job but registered as being willing and available for work

Question 5

Economic Growth

Answer 5

An increase in the production of economic goods and services in one period of time

Question 6

4 main macroeconomic objectives

Answer 6

1. Economic Growth
2. Minimising Unemployment
3. Price Stability
4. Stable Balance Of Payments On The Current Account

Question 7

Deficit (BOP)

Answer 7

Value of imports > value of exports

Question 8

Surplus (BOP)

Answer 8

Value of exports > value of imports

Question 9

Distribution of Income

Answer 9

Equitable Distribution of Income
Income and wealth should be distributed equitably, so the gap between the rich and the poor isn’t extreme

Question 10

CPI

Answer 10

The Consumer Price Index measures the household purchasing power with a (Family Expenditure) survey to find out what households spend their income on. From this a basket of goods is created and weighed according to the amount spent on each product

Question 11

RPI

Answer 11

Retail Price Index is the same as CPI but it involves housing costs such payments on mortgage interest, tax etc. Due to this, RPI has more value than CPI

Question 12

Productivity

Answer 12

defined as the output per worker per period of time

Question 13

Weighted index number (use and formula)

Answer 13

Use: We use weightings to show the relative importance of individual data in our findings

Formula: Sum of Weightings x Index numbers / Sum of Weightings

Question 14

Index number (use and formula)

Answer 14

Index numbers are used to make comparisons over time.

Raw number / Base year raw number x 100

Question 15

Economic Welfare

Answer 15

Theoretically, everyone wants to maximise their economic welfare

Economic Welfare: The economic satisfication of households/firms

Question 16

Exchange Rate

Answer 16

Strong Pound Imports Cheap Exports Dear (SPICED) and vice versa. This is because GBP is strong therefore has great spending power however less exports as expensive to others.

Question 17

GNI

Answer 17

Gross national income measures the total income earned by a country’s residents/businesses regardless of where it was earned

Question 18

GNP

Answer 18

Gross national product measures the total value of the goods and services produced by a country’s residents regardless where it was earned.

Question 19

PPP

Answer 19

PPP - Purchasing Power Parity
This is a theory that estimated how much the exchange rate needs adjusting so that an exchange is equivalent according to each currency’s purchasing power.
This helps minimise misleading comparisons between countries

Question 20

National Income

Answer 20

the total value of goods and services a country produces (usually the output in one year).
It can be measured in GDP, GNI or GNP

Question 21

Injections

Answer 21

This is where money enters the economy
1. Investment - spending on capital goods therefore more output
2. Exports - an injection of money from selling it
3. Government spending - welfare, increase demand

Question 22

Withdrawals

Answer 22

This is where money leaves the economy
1. Savings - people spending less so less demand
2. Imports - a withdrawal of money to other countries for the good
3. Taxes - less disposable income

Question 23

Net injections

Answer 23

If there are net injections in an economy, there will be an expansion of national output

Question 24

Net withdrawals

Answer 24

If there are net withdrawals from an economy, there will be a contraction of national output

Question 25

Aggregate Demand

Answer 25

Aggregate demand is the total demand for all goods and services in an economy at any given price level over a period of time.

Question 26

AD Formula

Answer 26

C + I + G + (X-M)
C - Consumption
I - Investment
G - Government Spending
X - Exports
M - Imports

Question 27

AD Curve

Answer 27

Price Level on Y-axis
Real National Output on X-axis
Aggregate Demand is the gradient

Question 28

Accelerator effect

Answer 28

It states that a rise in GDP will lead to a proportionately larger increase in investment (as they want to meet future anticipated demand)

Question 29

The multiplier effect

Answer 29

The multiplier effect occurs when an intial injection into the economy (circular flow of income) causes a proportionally larger final increase in the level of real national output

Question 30

IOE

Answer 30

Input = Output = Expenditure

Question 31

Macroeconomic equilibrium

Answer 31

the demand-side of the economy and supply-side of the economy equal each other.