introduction

Question 1

macroeconomic performance objectives

Answer 1

Full employment
Equal distribution of income & wealth
Environmental concern
Balance of payments equilibrium
Low and stable inflation
Sustained economic growth

Question 2

leading indicators

Answer 2

often change prior to large economic adjustments and, as such, can be used to predict future trends eg. stock market, retail sales, housing market

Question 3

lagging indicators

Answer 3

reflect the economy’s historical performance and changes to these are only identifiable after an economic trend or pattern has already been established eg. GDP, unemployment rate, consumer price index

Question 4

procyclical indicators

Answer 4

move in the same direction as the economy (increase when the economy is doing well, decrease when it’s bad)

Question 5

countercyclical indicators

Answer 5

move in the opposite direction to the general economy

Question 6

acyclical indicators

Answer 6

indicators with little/no correlation

Question 7

circular flow of income

Answer 7

shows flows of goods and services and factors of production between firms and households

Question 8

national output

Answer 8

the total value of output produced by firms

Question 9

national income

Answer 9

the total income received by people in the economy eg. profit, dividends, income, wages, rent

Question 10

national expenditure

Answer 10

total amount spent on goods and services