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Macroeconomics > Little Parts > Flashcards

Little Parts Flashcards

1
Q

Causes of a negative output gap

A

Increase in spare capacity
AD is insufficient

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2
Q

Consequences of negative output gap

A

Unemployment
Deflation
Wage inflation

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3
Q

Causes of positive output gap

A

Demand is high
Factories and workers operate far above capacity

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4
Q

Consequences of positive output gap

A

Increase in imports due to supply shortages
Current account deficit
Inflation

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5
Q

Terms of trade formula

A

Average export price / average import price x100

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6
Q

Comparative advantage

A

A country specialises in producing goods where they have a lower opportunity cost than others

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7
Q

Benefits of IT to developing economies

A

Economic growth
Reduced unemployment

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8
Q

Negatives of IT to developing economies

A

Vunrelable to external shocks
Devalue currency due to high exports
Inflation

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9
Q

Disadvantages of IT to developed countries

A

Currency fluctuations
External shock susceptibility

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10
Q

Advantages of IT to developed countries

A

Economic growth
Availability of resources

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11
Q

Short run economic growth diagram

A

Ad shifting outwards on SRAS

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12
Q

Causes of unemployment

A

Cyclical- negative econ growth
Structural -mismatch in skills
Real wage- wages above equilibrium

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13
Q

Characteristics of money

A

Portability - easy to carry
Divisability - divided into smaller values
Acceptability - accepted as a medium of exchange
Scarcity-
Durability- survive wear and tear
Stability in value

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14
Q

Functions of money

A

Medium of exchange
Store of value
Unit of account
Standard of deferred payment

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15
Q

Aggregate demand: expectations

A

Expectations can consist on:

Future income
Inflation rates
Economic growth

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16
Q

CPI

A

Measures the change in price level of a basket of goods and services in an economy

Only measures specific area

17
Q

SRAS

A

Measures the change in cost of production e.g wages and oil prices

Cost of production increases SRAS inwards VICE VERSA

18
Q

Marginal tax rate

A

Change in tax/change in income

19
Q

Macroeconomic measures

A

Economic growth- GDP- long term impacts doesn’t take into account

Inflation- CPI and RPI- doesn’t measure other areas

Measuring unemployment- labour force survey - tech required

and claimant count - work in hidden economy

20
Q

Difference between RPI and CPI

A

Both measure the average price for a basket of goods
Whereas
CPI doesn’t measure council tax or mortgage interest payments

21
Q

Labour force survey

A

A survey which asks are you u employed and actively seeking work

22
Q

Claimant count

A

Number of people receiving unemployment benefits

23
Q

Uk economy key macro trends

A

Real gdp rising every year since 1955

Manufactured less goods and moved toward tertiary

Current account deficit since 1980s

Migration rising since 1991

24
Q

Gini coefficient

A

Measured from 0 - 1 perfectly equal to perfectly unequal

Measure distribution of income across a population

25
Q

Absolute and relative poverty

A

Absolute - lack of basic resources needed for survival

Relative - less than a certain percentage of the median income

26
Q

Keynes view of aggregate supply

A

Argued economy can be below full employment level in even long run

As in a recession there is excess saving leading to decline in ADV

27
Q

GNI and GDP difference

A

GNI measures income received domestically and through foreign income

GDP measures income domestically

28
Q

Unemployment (E)

A

Pros
Phillips curve
Elastic supply
Improved CA

Cons
Lower output
Govt budget deficit
Inequality

29
Q

Causes of econ growth

A

Lower interest rates
Lower taxation
Increased consumer confidence
Weaker currency

SR- AD
LR- LRAS

30
Q

Deflation

A

Good - supply side deflation- lower prices for production

Bad - demand side- lower econ growth or recession

31
Q

Policy conflicts

A

Higher growth- inflation , worsened CA

Lower inflation positive CA position - lower growth higher unemployment

Phillips curve

32
Q

Economic development

A

Improvement in economic welfare

Higher incomes
Improved literacy
Reduced poverty
Better healthcare

Measured using HDI

33
Q

HDI

A

Life expectancy
Mean years of schooling
Income index

Cons
LR NOT SR
depends on other factors

34
Q

Causes of poverty

A

Increased unemployment - cyclical
Low econ growth
Structural unemployment
Deflation

Macroeconomics (13 decks)

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