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Economics > Macro Final week > Flashcards

Macro Final week Flashcards

1
Q

What is gross investment?

A

Total investment on new capital goods

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2
Q

What is net investment?

A

Gross investment minus capital consumption (eg the depreciation

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3
Q

What are the factors influencing SRAS?

A

costs of raw materials amd energy, changes in exchange rates, changes in tax rates

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4
Q

What is a negative output gap?

A

Actual growth is less than potential growth

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5
Q

What is a positive output gap?

A

Behyond the PPF - potential > actual

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6
Q

What is the education measure of HDI?

A

Mean years of schooling of adults 25 plus and expoed years of schooling if current five year olds

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7
Q

What is the health measure of HDI?

A

Life expectancy at birth

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8
Q

What is the income measure of the HDI?

A

Real GNI per capita adjusted for PPP

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9
Q

Name some other indicators for measuring development

A

Inequality adjusted HDI, Multidimensional poverty index, genuine progress indicator

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10
Q

What is a liquidity trap

A

Low Nominal interest rates have little effect on demand because of low confidence in the financial system

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11
Q

What effect has QE had on income inequality.

A

Widening income inequality, prop up of stock markets only benefits owners of assets in the higher income groups

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12
Q

What does an exchange rate depreciation lead to?

A

Higher inflation (cost push inflationary pressure)
Reduction in trade deficit
Rise in exports fall in imports increased in AD increase in employment

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13
Q

Costs of being internationally competitive

A

Changes over time, eroded with development ( not always look at Germany for example),Rise in exchange rate which then lowers competitiveness

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14
Q

What is the natural rate of unemployment

A

When the labour market is in equilibrium - structural, frictional and seasonal unemployemnt

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15
Q

What policies would reduce the natural rate of unemployment?

A

What determines the natural rate of unemployment
Free market economists - generous benefit systems, excessive labour market regulation
Interventionists
Lack of training
Lack of transport/ infrastructure

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16
Q

What is fiscal drag?

A

Higher wages following higher prices pushes tax payers into higher marginal tax rate brackets

17
Q

Two types of disequilibrium unemployemnt

A

Cyclical unemployment (unemployment in a recession due to a lack of aggregate demand)
Real wage unemployment ( wages are forced above equilibrium in a labour market - excess supply of labour)

18
Q

How is the CPI inflation rate measured?

A

Expenditure survey, consumer basket, prices weighted (basket updated yearly)

19
Q

Index number

A

Raw number / base year raw number x 1000

20
Q

Limitations of CPI

A

Not totally representative - different households spend inferential amounts
Doesn’t include the price of housing - housing tends to rise faster

21
Q

How does the RPI differ from the CPI?

A

RPI includes housing costs (mortgage payments), CPI takes into account substitution effects when the price of a good goes up. RPI tends to be higher

22
Q

What is the claimant count

A

Number receiving unemployemnt benefits

23
Q

What is the ILO? Labour force survey?

A

definitions of employed/ unemployed
legal requirement - classes people as employed, unemployed or inactive by labour force survey definitions

24
Q

Which tends to be higher LFS or claimant count?

A

LFS - people aren’t eligible for benefits

25
Q

Role of the WTO

A

Set and enforce rules on trade, resolve disputes, forum for negotiating trade liberalisation,

26
Q

What is Thomas Pikettys influential theory on inequality?

A

Rate of return of capital is greater than growth hence rising inequality is inevitable

27
Q

What does the financial policy committee do?

A

Macroprudential regualtion, identify and monitor against systemic risk, b of E

28
Q

What does the prudential regualtion authority do?

A

Microprudential regualtion, specifics liquidity/ capital ratios, industry standards for conduct

29
Q

What does the financial conduct t authority do?

A

Prevents loan sharks, supervises against Margot rigging, promotes competition (deregulation), miselling prevention

Economics (27 decks)

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