Macro 1/6 1st year Flashcards
what is the circular flow of income
exchange of money between firms and households
what is RPI
Retail price index (CPI that includes housing costs)
what is CPI?
consumer price index- takes goods and collects prices to take an average
what is gdp per capita
total gdp/population
what problems are caused by high levels of unemployment
- less tax money
- less economic growth
- less workers
why is unemployment negatively correlated with economic growth
less unemployment leads to increased output (productivity) = more gdp
define economically inactive
those who r neither employed or unemployed- not actively searching for employment
how do we use real gdp to measure economic growth
compare it to the most recent quarter
what is the basket of goods
average products bough in a household
why do we want inflation to stay low and steady
so the purchasing power of money doesn’t decrease
4 criteria for a person to be named unemployed
- willing to work 2. over 16 3. under 65 4. able to work in the next two weeks 5. not already employed (education)
definition of a depression
a severe recession
definition of real gdp
gdp adjusted for inflation
definition of recession
when 2 successive quarters show a decrease in gdp
definition of gdp
the value of all final goods and services produced within a country’s border
what are the three main objectives
economic growth, low inflation, low unemployment rates and high net exports-imports
what are index numbers and what do they measure
convert the value of a variable into a format that allows us to compare data easier
what is an open economy
income can both be injected in to and leak out of an economy over time
define economic activity
production, distribution and consumption of goods and services
what are examples of weighted index numbers and what do they measure for
CPI and RPI. CPI measures inflation
how might leakages come back as injections
buying and selling goods to other countries
how do we achieve economic growth
by increasing economic capacity to produced goods and services
define inflation
a sustained increase in general price level in an economy over a period of time
factors of production and their rewards
land (rent) capital (interest) labour (wages) entrepreneur (profit)
what are factors of production
inputs used in the production procss
what are economic policies
actions taken by government to influence economic performance
what is the claimant count
the number receiving unemployment benefits
what is a closed economy
income that circulates only within the economy
what are injections from the circular flow?
gov spending, investments, exports
what are leakages from the circular flow
taxes, savings, imports
