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Economics Y1 > Macro L2 > Flashcards

Macro L2 Flashcards

1
Q

Equation for index number:

A

Index number = preferred period/ base period x 100 (round to 1dp)

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2
Q

What is usually the base period?

A

The beginning period

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3
Q

What are measurements of nominal values?

A

Prices that are current at the time of the transaction

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4
Q

What are measurements of real values?

A

Quantities produced after removed effect of price changes

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5
Q

Equation to convert nominal to real measurements:

A

Price index = nominal GDP/real GDP x 100

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6
Q

Equation to convert nominal to real percentage change:

A

real percentage change = nominal percentage change - inflation percentage

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7
Q

Economic growth is either:

A
  • Increase in the real value of goods + services
  • Increase in the productive capacity of an economy ( caused by quantity and quality changes in factors of production)
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8
Q

GDP measurement features:

A
  • shows total output of economy
  • focuses on domestic economy
  • best to measure quantity of resources
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9
Q

GNI measurement:

A
  • focuses on income flows between countries
  • best to measure standard of living
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10
Q

What is actual economic growth represented by?

A

Percentage rate of growth of GDP/GNI

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11
Q

Equation for GDP/GNI per capita:

A

GDP per capita = GDP in a period/ pop in a country

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12
Q

Inflation:

A

Increase in general price level for goods + services

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13
Q

Deflation:

A

Decrease in general price level for goods + services

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14
Q

Disinflation:

A

Fall in rate of inflation (prices rising at a slower rate)

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15
Q

Why is deflation sometimes perceived to be negative?

A

People would expect lower prices so there would be a fall in demand as they postpone purchases

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16
Q

Employed:

A

Self-employed or working for firms

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17
Q

Unemployed:

A

In the workforce but without a job

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18
Q

Economically inactive:

A

Not active in the workforce –> may be sick, student

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19
Q

What other group of people does economically inactive include?

A

Discouraged workers, who have given up finding work

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20
Q

Underemployment:

A

The overqualified/ working less hours than they wish

21
Q

Name one macroeconomic policy objective and what it means.

A

Full employment is when all available labour resources are being used

22
Q

Why does full employment not always mean zero unemployment?

A

If there wasn’t some unemployment (due to job-seekers), there would be constant upward pressure on wages and prices

23
Q

What are the two measures of unemployment?

A
  1. Claimant count of unemployment (JSA)
  2. ILO unemployment rate
24
Q

What is the JSA?

A

Jobseeker’s Allowance, which is people claiming a benefit as they are out of work and ‘prepared’ to work

25
Q

What are the advantages and disadvantages of the claimant count of unemployment?

A

Advantages:
- Shows who’s claiming to be out of work
Disadvantages:
- Includes those who are unavailable or not prepared to work as well
- Excludes those who aren’t claiming the benefit but also need work
- Starts at 18

26
Q

What are the advantages and disadvantages of ILO unemployment rate?

A

Advantage:
- Shows those available, seeking work and without a job
- Starts at 16-17 years of age
Disadvantage:
- Based on sample evidence, which is extrapolated and therefore not representative

27
Q

Hyperinflation:

A

Very high rates of inflation where price levels increase by more than 50% per month

28
Q

How to measure each of the areas of macroeconomic performances?

A

Economic growth –> GDP, GNI, PPP
Inflation –> CPI/RPI/CPIH (consumer price index for housing as well)
Unemployment –> Claimant count, ILO unemployment rate

29
Q

What is a CPI?

A

Consumer Price Index –> overall change in consumer prices
- Doesn’t include housing
- Every year certain important items are added/removed

30
Q

RPI:

A

Retail Price Index

31
Q

What are the balance of payments account and how is it divided?

A

Record of all financial dealings. It is divided into:
- Current account = Record of purchases of goods + services
- Capital + Financial account = Record of money associated w/ savings, investment (speculation) + currency stabilisation

32
Q

What signs are given to an import and an export?

A

Import –> negative sign
Export –> positive sign

33
Q

What is a trade in goods called?

A

Trade in visibles

34
Q

What is a trade in services called?

A

Trade in invisibles

35
Q

How is balance of trade calculated?

A

Exports - imports

36
Q

What does current account consist of?

A

Balance of trade in goods and services + primary income + secondary income

37
Q

How is current balance calculated?

A

Balance of trade in goods + Balance of primary and secondary income

38
Q

Primary income:

A

Money which flows in and out of a country resulting from employment or investment

39
Q

Secondary income:

A

Movement of money between countries which aren’t paying for goods and services and are not the result of investment

40
Q

What is the current account status if exports > imports?

A

Current account surplus

41
Q

What is the current account status if imports > exports?

A

Current account deficit

42
Q

What can current account deficit be caused by?

A
  • Excessive gov spending
  • Buying too many imports
  • Borrowing excessively
43
Q

Limitations of increased GDP:

A
  • To what extent are people spending even if GDP increases?
  • What about hidden economy?
  • Does not necessarily mean there is an improvement in standard of living
  • Does not account for (regional) inequality
  • Worsened environmental impact
44
Q

Purchasing Power Parity

A

Measurement to compare spending power between two or more countries

45
Q

What does PPP allow?

A

Productivity and standard of living between countries to be compared

46
Q

Why may people not claim the JSA?

A
  • Stigma
  • High savings
47
Q

What is the Labour Force Survey?

A

Survey by the International Labour Organisation of those looking for work in the past 4 weeks and those available to work in the next 2

48
Q

What does a fall in exchange rate actually mean?

A

The currency has weakened

49
Q

How to calculate AD?

A

Aggregate demand = consumption + investment + gov spending + (exports - imports)

Economics Y1 (12 decks)

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