Macro Objectives Flashcards
Economic Growth
An increase in Real GDP
Inflation
A sustained rise in the general price level
Unemployment
The number of people able, available and willing to work but without a job
Trade Balance
Value of exports of goods and services minus value of imports of goods and services
Bank of England Base Rates
An interest rate set by the BoE
It influences all the other interest rates in the UK economy
Public Sector Net Debt
The accumulated total of budget deficits
(the difference between what the government receives in revenue and what it spends)
Productivity
A measure of how much economic output is generated for a unit of input over a period of time
Gini Coefficient
A measure of income inequality that condenses the entire income distribution for a country into a number between 0 and 1
GDP
Gross Domestic Product
The total value of all the goods and services a country produced in a certain period
Real GDP
The total value of goods and services produced within a country over a year, adjusted for inflation
(real) GDP per Capita
The (inflation adjusted) GDP of a country divided by the population
Why governments aim for economic growth
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
What costs fast economic growth can lead to
Greater Inequality
Higher Unemployment
Education (impacting birth rates and infant mortality rates)
Price Level
The average price of multiple goods, services and products in an economy
CPI
Consumer Price Index
A measure of the general level of prices in the UK
PPP
Purchasing Power Parity
An exchange rate adjusted to reflect the relative purchasing power of incomes in different countries
Why we aim for low and stable inflation
If inflation changes, workers and their firms are caught in a spiral of wanting higher wages and therefore higher company prices
Why we don’t aim for deflation
Harder to pay debts as price levels increase so you have to pay more
Reduced spending and investment which reduces economic growth
Labour Force Survey
A survey measuring the number of employed and unemployed people in the country
Claimant Count
The number of people claiming the Jobseeker’s Allowance each month
Why we aim for low unemployment
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
Balance of Payments
A set of accounts showing the transactions conducted between residents of a country and the rest of the world
Trade Balance
The difference between a country’s value of imports and the value of exports
Labour Productivity
A measure of how much output there is per unit of input
Output per worker.
Why a trade deficit might be caused
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
Why we might worry about a trade deficit
An increased number of imports of a specific industry results in less demand from domestic producers in that industry, which can increase unemployment
Sustainable Economic Growth
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
Fiscal Policy
Where changes in government spending, transgfers and taxes change the current level of aggregate demand and allow the government to influence GDP
Budget Deficit
Where the government spends more money than they receive
National Debt
The amount of money the government has borrowed to cover expenses
Monetary Policy
Where a country’s government or central bank controls and changes the country’s interest rate to change the aggregate demand
