Macro

Question 0

What is aggregate demand?

Answer 0

C+I+G+(X-M)

AD is the total spending of goods and services within an economy over a given period of time.

Question 1

What are the governments macro economic objectives?

Answer 1

Stable economic growth
Reducing unemployment
Favourable balance of payment on the current account
Redistribution of income
Low and stable inflation
Favourable exchange rate

Question 2

What is aggregate supply?

Answer 2

The total amount of good and services that producers are willing to supply at a certain price level over a period of time.

Question 3

How do you shift AS?

Answer 3

Increase the availability of quality raw materials.

Efficiency to reduce production cost.

Question 4

What is circular flow of income?

Answer 4

Movement of income between households and firms within an economy.

Question 5

What are withdrawals/leakages?

Answer 5

When money leaves the economy. This can be caused by saving, tax or imports.

Question 6

What is an injection?

Answer 6

It adds money to the economy. This can be done by investments, government spending and exports.

Question 7

What is the multiplier?

Answer 7

A concept that explains how much national income increases when there is an increase in injection.

Question 8

What is economic growth?

Answer 8

An increase in production of goods and services within an economy over a period of time.

Question 9

What is short-run economic growth?

Answer 9

This happens by influence of AD and is the increase in out levels by using resources efficiently.

Question 10

What is long-run economic growth?

Answer 10

This is influenced by AS and is the increase in productive capacity of the economy.

Question 11

What are some benefits of economic growth?

Answer 11

Increase in disposable income
Decrease in unemployment
Increased standard of living
Lower inflation rate
Increase in life expectancy

Question 12

What are some drawbacks of economic growth?

Answer 12

Increased population
Lower standard of living
Increase in imports
Increase in consumption of renewable resources
Social costs: stress and family breakdown

Question 13

How do you increase AD?

Answer 13

Increase either I,G,C or (X-M)

Question 14

What are the methods of measuring economic growth?

Answer 14

Output approach
Expenditure approach
Income approach

Question 15

Explain output approach.

Answer 15

This is the total production within an economy over a certain period. However a drawback is that household production is excluded.

Question 16

Explain the expenditure approach.

Answer 16

This is the total spending by economic agents over a certain period. However a drawback is that double counting may occur due to second hand purchase/ component parts to a final product- calculated from final product.

Question 17

Explain the income approach.

Answer 17

This is the total earning within an economy over a period. However drawbacks are that not all income is declared, income from informal sector is excluded and transfer benefits are not included because they’re not earned from engaging in economic activity.

Question 18

What are the 3 KPI’s?

Answer 18

Economic growth
Inflation
Unemployment rate

Question 19

What is inflation?

Answer 19

The sustained increase in price levels within an economy over a given period of time.

Question 20

What is international trade?

Answer 20

The exchange of products between countries.

Question 21

What is gross domestic product per head?

Answer 21

The total output divided by the population within an economy over a given period of time.

Question 22

What is fiscal policy?

Answer 22

The taxation and spending decisions of a government.

Question 23

What is monetary policy?

Answer 23

Central bank/government decisions on the rate of interest, the supply of money and the exchange rate.

Question 24

What is protectionism?

Answer 24

The protection of domestic industries from foreign competition.

Question 25

What are the protectionism policies?

Answer 25

Tariffs
Quotas
Embargoes
Red tape-time delay on imports
Quality standards

Question 26

What are the supply side policies?

Answer 26

Education and training
Reduction in taxes
National minimum wage
Privatisation
Reduction in trade union power
Subsidies
Deregulate the market
Grants