macro objectives Flashcards

Question

what is Occupational immobility of labour

Answer 1

When workers find it difficult to change jobs in different industries

Answer 2

Inability of labour to move from one area of work to another to find work

Answer 3

lacks qualifications lacks specific skills/training that’s required technology replacing labour

Answer 4

family ties may prevent people from wanting to move cost of living may increase if they move to a diff area e.g london higher than here may not be good schools in the area for people's children or they may be doing gcses or a levels

Answer 5

Number of people claiming unemployment benefits (jobseekers allowance and universal credit) Data is easy to obtain no cost in collecting data

Answer 6

Can be manipulated by gov to make it seem smaller Older people have a pension instead of job seeker allowance which doesn't reflect unemployment as they wouldn't be apart of this yet they are unemployed

Answer 7

Nationally representative survey of 60,000 households of people 16 or above. Each household - interviewed face to face. Figures based on average for last 3 month period.

Answer 8

Internationally agreed measure for unemployment so it's easier to make comparisons with other countries thought to be more accurate than the claimant count- claimant count only includes those eligible for benefits.

Answer 9

The LFS relies on survey data from a sample of around 60,000 people. However, this sample may not be fully representative of the entire population expensive to put together

Answer 10

High unemployment reduces consumer purchasing power, as unemployed individuals have less disposable income to spend on goods and services. This can lead to decreased sales for businesses, particularly those in industries that rely heavily on consumer spending, such as retail, hospitality, and entertainment. As a result, businesses may experience lower revenues and profitability. Lower consumer spending and weak economic conditions can dampen business confidence, leading to reduced investment in new projects, research, and development. This can hinder long-term growth prospects for businesses and the economy as a whole.

Answer 11

Loss of income can make it difficult to meet basic needs such as housing, food, and healthcare. This can result in increased poverty rates, homelessness, and reliance on social welfare programs. Without a steady income, individuals may resort to borrowing to cover their expenses, leading to increased debt and potential long-term financial challenges.

Answer 12

Unemployment can provide individuals with the opportunity to invest in their skills and education. When someone loses their job, they may use the time they would have spent working to enroll in training programs, pursue further education, or develop new skills. Unemployment can prompt individuals to seek additional education or training to improve their employability, potentially leading to a more skilled workforce in the long run.

Answer 13

Prolonged periods of unemployment can lead to skill degradation, loss of human capital, and reduced employability, making it more difficult for individuals to re-enter the workforce even when economic conditions improve. Surplus in labour means that there a higher spare capacity making it harder to reach its potential output and actual output will decrease so if resources are not utilised efficiently its not going to be a le to operate at potential leading to slower econ growth and lower gdp so there is less products available to consumers than there should be

Answer 14

Demand for products increased meaning that firms can charge higher prices as they can't match the demand just yet. Consumers are willing to pay higher prices as they are demanding the product

Answer 15

Employment will increase as firms will need to match the demand of the consumers. Through this firms will have to hire more people decreasing the problem of unemployment as more people will be able to join the work force. Cyclical e unemployment will decrease

Answer 16

As demand-pull inflation increases prices domestically, the cost of goods and services can also rise. This can make domestically produced goods more expensive compared to those produced in other countries, potentially reducing their competitiveness in the global market this leads to less export demand therefore less revenue meaning the current account will worsen

Answer 17

The costs of products increase meaning to cover these costs firms will have to increase the costs of the products they sell. This may mean that consumers might not buy the product or as much as the product depending on its elasticity. This may mean AD would decrease and GDP would decrease taking a toll on economic growth.

Answer 18

Due to the higher costs, firms may have to lay off workers as they can't fund their wages as they will have to spend their money on raw materials to get the products that consumers are demanding

Answer 19

Higher domestic prices can lead to higher export prices. If a country's goods become more expensive for foreign buyers, demand for those exports may decrease. this would worsen the current account as there is less exports leaving the country leading to a current account deficit as its imports are more valuable then exports

Answer 20

Effects of inflation will depend upon its level, whether it is stable or fluctuating and whether it is anticipated or unanticipated. The cause of inflation is significant as cost push inflation has more negative effects on macroeconomic indicators than demand pull inflation. Costs of inflation are smaller when inflation is anticipated, since steps can then be taken to protect the real value of people’s income and saving and firms can plan with more certainty encouraging I. High, volatile and unanticipated rate of inflation can be damaging -individual businesses, consumers and economy. However, a low, stable and correctly anticipated rate of inflation can be beneficial.

Answer 21

Stability is vital for firms to invest. PL begins to raise as the economy nears Yf so it is near full employment. By investing they can further push the economy to potential output as they use the spare capacity in the economy

Answer 22

Deflation leads to lower prices for goods and services, which can reduce the revenue and profits of businesses. This, in turn, can lead to cost-cutting measures, such as layoffs and reduced investment. When consumers expect prices to continue falling, they may delay purchases in anticipation of lower prices in the future. This behavior reduces current consumer spending, which can slow down economic activity and growth.

Answer 23

As prices fall, the purchasing power of money increases. Consumers can buy more goods and services with the same amount of money, which can enhance their standard of living. The pressure to cut costs and maintain competitiveness can drive technological advancements and innovation, potentially leading to greater productivity gains over time- technological advancements can enable businesses to produce more output with the same amount of input (labor, capital, materials). This increased efficiency can reduce spare capacity by moving closer to full utilization of resources.

Answer 24

It is when one section of the BOP is in Deficit or Surplus e.g there could be a DEFICIT on the Current Account.

Answer 25

by a SURPLUS on one of the other sections e.g Financial Account. (This is how the USA and UK run such high deficits)

Answer 26

individuals/ businesses to firms abroad

Answer 27

rising domestic income levels as imports will exceed exports appreciation of the exchange rate- imports to become cheaper and exports to become more expensive, which will worsen the current account fall in income levels of consumers abroad as it decreases demand for exports. As the value of the currency rises, foreign buyers may find domestic products less competitive, reducing export demand.

Answer 28

Income earned by foreign residents in the UK is more than income earned by UK residents abroad Rising profit outflows from FDI (forgein direct investors) compared to FDI profit flows inward Foreign Aid flows abroad/government social provision e.g pensions sent abroad rises

Answer 29

When foreign residents earn more income in the UK compared to the income UK residents earn abroad, the net outflow of income increases. This situation leads to a deficit in the primary income section of the current account as remittances (sum of money paid) and investment income outflows exceed inflows.

Answer 30

When profits earned by foreign direct investors in the domestic economy exceed the profits earned by domestic investors abroad, there is a net outflow of capital. This situation causes a deficit in the primary income section of the current account, as the economy pays out more in investment returns than it receives.

Answer 31

Increased foreign aid and government social provisions sent abroad result in higher secondary income outflows. This can contribute to a current account deficit as these transfers are not matched by corresponding inflows, leading to a net negative impact on the current account balance.

Answer 32

expenditure switching policies expenditure reducing policies

Answer 33

Risk of lower AD Debt burden risk Rapid depreciation of the currency (cost push inflation)

Answer 34

As the trade balance is significant part of the Cacct then if it is in a deficit then it will cause (X-M) to be negative, reducing AD and economic growth rates. This could result in higher unemployment as there is less demand for workers to produce domestic goods/services.

Answer 35

If the rising Cacct deficit is funded by rising household, business (corporate) and government debts this could affect the nation’s credit rating as international finance markets become nervous about the ability of the nation’s economic agents to repay the debt owed. This could mean that lenders restrict/avoid further lending to the nation limiting to maintain its spending, standards of living and government spending.

Answer 36

If foreign economic agents (and to some extent domestic) become nervous about the levels of private and public sector debt of a nation they might decide to sell the assets they hold in that nation e.g property, shares, capital (factories/machinery) and moving savings into other nation’s bank accounts. This means that they will have to sell that nations currency to buy a foreign currency. This could result in a large rise in the supply of the domestic currency leading to a significant deprecation and rapid COST PUSH inflation. A rapid depreciation of the er causes a drastic WPIDEC effect making imports increasingly expensive. This is especially a problem if many of those imports are medicines, food, energy etc as they can be very price inelastic.

Answer 37

focus is to get consumers to buy domestic g and s and avoid imports.

Answer 38

using trade barriers- tariffs (tax imposed on an imported good), quotas (restriction on the quantity of the good), subsides. depreciating the exchange rate can help improve the current account deficit by making exports cheaper and imports more expensive ensuring a better trade balance

Answer 39

depending on the price elasticity of demand, Sudden shifts in policy can cause short-term economic disruption. Industries reliant on imported inputs may face higher costs, and consumers may face limited availability of goods previously imported

Answer 40

Policies implemented to reduce the demand for imports and discourage investment via imported capital goods reducing the mpm (marginal propensity to import)

Answer 41

through contradictory monetary/ fiscal policies such as higher income taxes/ higher interest rates

Answer 42

this harms the economy in terms of lower c and i with cyclical unemployment rising harms competitiveness and incentive to work

Answer 43

aim to shift lras aim to remove obstructions in the free market that are holding back improvements to the long-run potential

Answer 44

training education labor market flexibility (making modifications to labor- hiring, firing etc in response to changes in the market) subsides to fund r and d

Answer 45

individuals investing on companies abroad individuals and businesses are moving savings abroad e.g hot money- money invested in another country because the value of what they invested in is expected to rise such as property or shares

Answer 46

foreigners investing money into our economy foreigners and foreign businesses are moving their savings into our banking systems

Answer 47

Employment, capital gains (selling an asset for a profit), rent received, dividends, interest, pension income, shares, stocks

Answer 48

Saving, gold, property, pension fund, antiques, shares The more wealth you have, the more income you earn

Answer 49

Wealth is the stock of assets owned by an individuals e.g house, furniture, land, financial investments. However it’s a measurable value when its sold and individuals are not required to keep a record of their assets as wealth itself is not taxed until a person dies when it becomes liable for inheritance tax

Answer 50

Income is the flow of earnings over a period of time usually a year period

Answer 51

he unequal distribution of assets of population

Answer 52

refers to which income is distributed in an uneven manner amongst a population

Answer 53

social unrest, tensions and civil disobedience a poverty cycle may be embedded into people loss of allocative efficiency

Answer 54

a huge gap in living standards between the rich and the poor can create tensions this causes external costs e.g spending more on security services e.g police

Answer 55

poorer families have limited access to health care and education which is an underconsumption of merit goods

Answer 56

capital investments and production will become tailored towards the preferences of the rich

Answer 57

Low incomes leads to a cycle of poverty in which a low income leads to a lack of ability to fund education/ healthcare so merit goods are under consumed lead to lower earnings in the future Inequality leads to more income being redistributed back to higher income earners through savings and wealth

Answer 58

Increase g spending to combat social unrest, crime, and welfare which represents an opp cost in g spending Trick down effect- as those on higher incomes/ have wealth own businesses, hire staff and spend a proportion of their incomes so creating other jobs and therefore some have higher incomes than would have occurred without such higher income earners

Answer 59

Gov fiscal policy- is the tax system progressive? Is there a welfare system? accumulation of wealth- leads to those with more wealth earning a higher income level of human capital- a higher educated and skilled worker will demand a higher wage Discrimination- leading to wage differentials age disability Age- those retired mostly live on state pension which fallen behind av wage rises so leads to rising differences in purchasing power

Answer 60

Inheritance Incomes lead to the ability to purchase assets e.g property, shares (links between higher wealth and incomes is clear)

Answer 61

Value of final good and services produced in each sector of the economy during the year.

Answer 62

income received in same year by people and firms involved in the production of g and s

Answer 63

All money spent buying up this year's output including x but minus m

Answer 64

economic agents learn from the PAST and use the experience to inform future decision.

Answer 65

economic agents learn from PAST AND FUTURE forecasts to inform decisions