Macro(section 6/8) Flashcards
Objectives of Government
Inflation (1-3%) Balance of payments (imports/exports) Economic Growth (GDP) Unemployment levels Equitable distribution of incmone Balanced budget (gov.spending/tax)
Balance of Payments
Current account (takes into account imports/exports) X > M = Surplus (exporting more) X < M = Defecit (importing more)
Economic Growth
Rate of change of a country’s output
-Measured by GDP (Real GDP=Takes into account inflaton/GDP per capita=Measures standard of living)
Benefits of Economic Growth
Improved standards of living
Job creation
Lower gov. spending on JSA
More consumer spending/Gov. investment
Unemployment
When looking for work your unemployed
Represents a waste of resources
Indicator of poor EG
Benefits of unemployment
Improved standards of living
Social benefits
Higher wages
More tax revenue for gov.
Measurements of unemployment
Labour force survey
Claiment count
Inflation
Rate of change of average prices in an economy
Affects the value of money
Between 1-3%
Caused by AD/AS
Measurements of Inflation
CPI (Avg. basket of goods)
RPI
Measurement of EG
Output method=Income method=Expenditure
Boom (ES)
Output is high Production=High Unemployment=Low Inflation=High Consumer spending=High
Slump (ES)
Output is low Production=Low Unemployment=High Inflation=Low Consumner spending=Low
Recession
Output is low
Growth
Output is high
Types of unemployment
Cyclical (reduced demand for labour)
Frictional (workers loooking for another job)
Involuntary (willing to work but can’t find job)
Regional (local industries no longer operate)
Seasonal (due to time of season)
Structural (lack of skills for job available)
Voluntary (unwilling to accept job at the wage rate)
Technolgoical (machinery taking a job)
