lesson 1

Question 1

what is macro economics?

Answer 1

economics that focuses on the economy as a whole and its performance and behaviour (rather than individuals, markets or businesses)

Question 2

how do we measure economic performance? (the four factors)

Answer 2

looking at our:
- output
- unemployment levels
- inflation
- balance of payments

Question 3

what is balance of payments?

Answer 3

the imports and exports coming in and out the country

Question 4

what does output tell us?

Answer 4

• the value of everything produced
• whether the country can deliver more goods and services to citizens over time

Question 5

what is output often referred to as?

Answer 5

economic growth

Question 6

how do we measure growth (value of everything produced)?

Answer 6

GDP (measures output)

Question 7

for output over time what does actual growth tell us?

Answer 7

what is happening right now

Question 8

for output over time what does trend growth tell us?

Answer 8

the average over time

Question 9

for output over time what does being below the trend show?

Answer 9

unemployment

Question 10

for output over time what does being above the trend show?

Answer 10

inflation

Question 11

when REAL is placed before GDP what does it mean?

Answer 11

its adjusted for inflation

Question 12

what does the level of unemployment tell us about the economy?

Answer 12

if the economy is able to provide jobs for the labour force

Question 13

when will unemployment tend to rise?

Answer 13

actual growth is below trend growth

Question 14

why does unemployment have a huge opportunity cost?

Answer 14

• waste of scarce resources as lost out put cannot be recovered

Question 15

if we produce more (increase output) what happens?

Answer 15

living standards go up

Question 16

what does it mean if economic growth is positive?

Answer 16

• more goods being produced
• jobs produced
• consumers buy more so they have more options and raise living standards

Question 17

what does it mean if economic growth is negative?

Answer 17

• the economy is shrinking
• unemployment
• less goods being made
• less tax receipts
• falling living standards

Question 18

what does it mean for the government if there is less tax receipts?

Answer 18

the government has less money to spend which means a decrease in the public goods being provided and their quality

Question 19

why does growth vary so much?

Answer 19

• confidence varies as the economy is a reflection of the people consuming the products
• economic growth
• external factors

Question 20

why does consumer confidence varying effect the economy?

Answer 20

the economy is a reflection of the people consuming the products

Question 21

consequences of strong growth?

Answer 21

• higher living standards
• inflation

Question 22

consequences of negative growth?

Answer 22

• lower living standards
• inflation pressure eases
• economy shrinks
• unemployment

Question 23

what is inflation?

Answer 23

increase in the price levels over time. inflation reduces the value of the currency over time.

Question 24

when inflation causes prices to rise quickly, how do consumer, firms and workers react which can cause prices to be driven up further?

Answer 24

• the wage/price spiral
• workers may push for higher wages, increasing business costs which can cause higher prices

Question 25

what is a BOP deficit?

Answer 25

• import more than we export
• leakages

Question 26

what does the government want?

Answer 26

• high output
• low unemployment
• low inflation
• a reasonable balance of payments

Question 27

ways to measure the living standards of a population?

Answer 27

• employment/unemployment
• GDP
• doctors per person
• housing
  poverty rates
• infant mortality
• incomes
• educational attainment

Question 28

what can the UK do to be more internationally competitive?

Answer 28

• raise the quality of goods
• increasing productivity
• lower costs by increasing productivity