Macro Objectives

Question 1

Economic Growth

Answer 1

An increase in Real GDP

Question 2

Inflation

Answer 2

A sustained rise in the general price level

Question 3

Unemployment

Answer 3

The number of people able, available and willing to work but without a job

Question 4

Trade Balance

Answer 4

Value of exports of goods and services minus value of imports of goods and services

Question 5

Bank of England Base Rates

Answer 5

An interest rate set by the BoE
It influences all the other interest rates in the UK economy

Question 6

Public Sector Net Debt

Answer 6

The accumulated total of budget deficits
(the difference between what the government receives in revenue and what it spends)

Question 7

Productivity

Answer 7

A measure of how much economic output is generated for a unit of input over a period of time

Question 8

Gini Coefficient

Answer 8

A measure of income inequality that condenses the entire income distribution for a country into a number between 0 and 1

Question 9

GDP

Answer 9

Gross Domestic Product
The total value of all the goods and services a country produced in a certain period

Question 10

Real GDP

Answer 10

The total value of goods and services produced within a country over a year, adjusted for inflation

Question 11

(real) GDP per Capita

Answer 11

The (inflation adjusted) GDP of a country divided by the population

Question 12

Why governments aim for economic growth

Answer 12

Generally better quality of life
Higher productivity in the economy Higher gross income
More government revenue through fiscal policy
More spending from the government to the public sectors

Question 13

What costs fast economic growth can lead to

Answer 13

Greater Inequality
Higher Unemployment
Education (impacting birth rates and infant mortality rates)

Question 14

Price Level

Answer 14

The average price of multiple goods, services and products in an economy

Question 15

CPI

Answer 15

Consumer Price Index
A measure of the general level of prices in the UK

Question 16

PPP

Answer 16

Purchasing Power Parity
An exchange rate adjusted to reflect the relative purchasing power of incomes in different countries

Question 17

Why we aim for low and stable inflation

Answer 17

If inflation changes, workers and their firms are caught in a spiral of wanting higher wages and therefore higher company prices

Question 18

Why we don’t aim for deflation

Answer 18

Harder to pay debts as price levels increase so you have to pay more
Reduced spending and investment which reduces economic growth

Question 19

Labour Force Survey

Answer 19

A survey measuring the number of employed and unemployed people in the country

Question 20

Claimant Count

Answer 20

The number of people claiming the Jobseeker’s Allowance each month

Question 21

Why we aim for low unemployment

Answer 21

Economic Growth is more likely to take place
High Unemployment means:
The government receives less in taxation
Trade Balance could be disrupted as productivity decreases therefore exports are decreased

Question 22

Balance of Payments

Answer 22

A set of accounts showing the transactions conducted between residents of a country and the rest of the world

Question 23

Trade Balance

Answer 23

The difference between a country’s value of imports and the value of exports

Question 24

Labour Productivity

Answer 24

A measure of how much output there is per unit of input
Output per worker.

Question 25

Why a trade deficit might be caused

Answer 25

When the value of imports is greater than the value of exports
This can be because:
Machinery can be mass imported which will later boost productivity and exports
Temporary shortcomings economically which can be fixed through imports

Question 26

Why we might worry about a trade deficit

Answer 26

An increased number of imports of a specific industry results in less demand from domestic producers in that industry, which can increase unemployment

Question 27

Sustainable Economic Growth

Answer 27

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Question 28

Fiscal Policy

Answer 28

Where changes in government spending, transgfers and taxes change the current level of aggregate demand and allow the government to influence GDP

Question 29

Budget Deficit

Answer 29

Where the government spends more money than they receive

Question 30

National Debt

Answer 30

The amount of money the government has borrowed to cover expenses

Question 31

Monetary Policy

Answer 31

Where a country’s government or central bank controls and changes the country’s interest rate to change the aggregate demand