MACRO A2

Question 1

WHAT ARE THE FOUR MAIN MACRO ECONOMIC OBJECTS?

Answer 1

SUSTAINABLE ECONOMIC GROWTH, LOW INFLATION, LOW UNEMPLOYMENT, IMPROVING BALANCE OF PAYMENTS

Question 2

WHAT IS ECONOMIC GROWTH?

Answer 2

INCREASE IN PRODUCTIVE POTENTIAL

Question 3

HOW IS ECONOMIC GROWTH MEASURED IN THE SR?

Answer 3

PERCENTAGE CHANGE IN REAL NATIONAL OUTPUT (ACTUAL) (DUE TO INCREASE IN AD/AS)

Question 4

HOW IS ECONOMIC GRWOTH MEASURED IN THE LR

Answer 4

INCREASE IN CAPACITY/PRODUCTIVE POTENTIAL (DUE TO QUALITY AND QUANTITY)

Question 5

TREND RATE

Answer 5

AVERAGE RATE OF ECONOMIC GRWOTH

Question 6

PPF

Answer 6

SR INSIDE THE PPF, LONG RUN SHIFT OUTWARDS

Question 7

ECONOMIC CYCLE

Answer 7

FLUCTUATIONS OF ACTUAL GROWTH OVER TIME

Question 8

BOOM

Answer 8

WHEN ECONOMY IS GROWING TOO QUICKLY. LEADS TO DECREASE IN U/E BUT INCREASE IN INFLATION

Question 9

WHAT IS A RECESSION?

Answer 9

NEGATIVE ECONOMIC GROWTH FOR AT LEAST TWO CONSECUTIVE QUARTERS

Question 10

WHAT IS A RECOVERY?

Answer 10

WHEN ECONOMY GROWS AGAIN FROM NEGATIVE TO POSITIVE GRWOTH

Question 11

WHAT IS A NEGATIVE OUTPUT GAP?

Answer 11

ACTUAL OUTPUT IS BELOW TREND OUTPUT - LEAD TO DOWNWARD PRESSURE ON INFLATION

Question 12

WHAT IS A POSITIVE OUTPUT GAP?

Answer 12

ACTUAL OUTPUT IS ABOVE TREND OUTPUT - LEAD TO UPWARD PRESSURE ON INFLATION