Introducing Macroeconomics Flashcards
What is macroeconomics
It is a study of the economy as a whole
What are the terms that are used in macroeconomics
Households
Firms
Government
International sector
What are households
They receive income through wages and salaries from jobs and their investments and then buy the output of firms
What are firms
Businesses hire land, labour and capital inputs when making products for which they page wages and rent (income). Firms receive payment from consumers and profitable businesses may invest a % of profits in new producer goods such as equipment and technology
What are government
They collect taxes to fund government spending
What is the international sector
They UK buys imports from other countries, and overseas businesses and consumers buy U.K. products
What is macroeconomic stability
A situation where the key macro variables such as growth, inflation, interest rates and investment do not change much from time to time
The UK’s macroeconomic stability
They UK economy has been in macro stability in the last few years. Growth has been above 2% p/a, inflation has remained low and unemployment has been falling (but larger trade deficit and inequality)
What is macroeconomic performance
How week a country is doing in reaching objectives of policy
What are indicators of macroeconomic stability
Jobs Prices Trade Growth Development Efficiency Public services Environment Inequality of income and wealth
What is an index number
A way of expressing economic data over a period of time.
It is expressed as 100 times the ratio to the base value
What is the base value of an index number
Always 100
How to calculate an index number
(Data value in year Y / base year value) X 100
What is consumer price index
The main measure of changes in the cost of living in the U.K.
