macro flashcards (bulk
What are three ways money can be injected from the economy?
Investment, Government spending and exports
What is skimpflation?
Skimpflation is when companies lower quality to cut costs while keeping prices the same, reducing value for consumers.
What are three ways money can be withdrawed from the economy?
Saving , Taxation, Imports.
What is hotmoney?
Money that is used to be invested and borrowed.
What is shrinkflation?
Shrinkflation is when companies reduce product size/quantity but maintain the price.
What is exchange rate?
The value of one currency in terms of another.
What is corporation tax?
Tax that companies pay on their profits.
Describe the basic model of the circular flow of income
Households –> Firms : factors for production ( land, labour, capital, enterprise) and Consumer expenditure.
Firms –> Households : Goods and services and wages, rent, dividends.
What is interest?
Cost for borrowing / reward for saving/lending
What is the formula for the macroeconomic consumption function?
AD = C + I + G + (X-M)
What is Ceretus Parabus?
All the other things stay the same
Define aggregate demand
Total spending on goods and services in an economy.
What is national debt?
The accumalation of all of the previous deficits.
What is the macro economic consumption function
AD = C+I+G +(X-M)
What are the 6 government economic objectives in a mixed economy?q
- Encouraging price stability (low inflation)
*Ensuring the working population is productive (full employment/minimise unemployment)
*Maintaining a favourable balance of payments on the current account (international trade)
*promoting steady economic growth (2.25%)
*Redistributing income and wealth more equitably (fairly)
*Reducing the government budget deficit and the national debt.
What is quantitative easing.
When the government sells the money borrowed back into an account digitably whilst keeping the physical money
What is quantitative easing?
When the government sells the money borrowed back into an account digitable whilst keeping the physical money.
How do governments reduce deficits.
Borrow
Sell govt assets
Use surpluses form previous years
Print money - BAD IDEA
How do governments reduce deficits?
Borrow
Sell government assets
Use surpluses from previous years
print money
What is a bond
Certificate to show that money has been borrowed
What is a trade off?
When there is an increase in something that is bad for the economy (inflation) but there is an increase in something good (increased employment)
What are bonds?
Certificates to show that money has been borrowed
What are examples of input costs
Wage costs per unit of output
Labour productivity (higher efficiency lowers unit costs)
Raw material and component prices
Interest rates, business rents, fuel, energy costs.
What are shifts in Short run aggregate supply
-Input costs
-Business taxes, subsidies and imported costs
-Supply shocks
What are the factors affecting government spending.
Stage of the economic cycle
Unemployment levels
Government priority
Population growth
Tax revenue
What are the factors affecting exports
The stage of the economic cycle overseas
International competitiveness of UK goods and services
Exchange rates
Tariffs used by countries
What are examples of business taxes, subsidies and imported costs
VAT, employment taxes
Scale and size of government subsidies
Business rates, costs of meeting business regulation
Costs of imported components ( affected by exchange rate + fluctuations in the world commodity prices).
What are the factors affecting consumer spending.
Income tax
Stage of the economic cycle
Interest rates
Consumer confidence
What are the factors affecting imports
The stage of the economic cycle in the UK
International competitiveness of good and services.
What is the formula for AD
AD = C+I+G +(X-M)
What are the factors affecting business spending
Interest rates
Spare capacity in the economy
Profit levels
Corporation tax
What is aggregate demand?
The total spending on goods and services in an economy.
What is the definition of unemployed
Anyone who is able, available and actively seeking employment
What are the main UK measures of unemployment
Claimant count
Labour force survey
What are the 5 policies for cutting unemployment?
Targeted macro stimulus policies to boost growth
Expansion of apprenticeship schemes
Improving geographical immobility of labour
Measure to stimulate business start-ups
Active regional development policies.
What is real wage?
When a rise in real wages above a market-clearing level causes a contraction in labour demand and lower unemployment.
What is hidden unemployment
Unemployment which is known to exist but is not included in the official government figures. Also can refer to a persons skills being unemployed rather than the person being unemployed.
What are the economic costs of high unemployment.
Lost output (waste of revenue)
Lower GDP growth
What is structural unemployment
When there is a mis-match between the skills of those unemployed and the skills that new jobs require. Happens when there is a change in the structure of the economy.