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Economics - Ethan Parmar > Macro - Topic 1 > Flashcards

Macro - Topic 1 Flashcards

1
Q

Macroeconomics Meaning

A

Looking at the economy as a whole

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2
Q

What are the 2 main things we look at in macroeconomics

A

Aggregate supply and demand

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3
Q

What is aggregate demand

A

Total Value of demand

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4
Q

What is the equation for AD

A

C + I G + (X - M )

Consumption +Investment +government expenditure +net exports

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5
Q

What is aggregate supply

A

Total value of supply

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6
Q

How does an economy supply?

A

With the 4 factors of production

Land
Labour
Capital
Entrepreneurship

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7
Q

What are the 4 Factors of Production?

A

Land
Labour
Capital
Entrepreneurship

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8
Q

What is GDP

A

Total value of goods and services sold in an economy

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9
Q

What does Real GDP measure

A

The total value of goods and services sold within a country in an economy adjusted for inflation

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10
Q

How do you increase GDP

A

Working on increasing one of the 4 components of AD

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11
Q

What is Nominal GDP

A

The value of national output at current prices without the affects of inflation accounted for

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12
Q

What is real GDP

A

Value of output with adjustments for inflation

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13
Q

What are the Gov Obj’s (6)

A 
Economic Growth 
Keep Inflation Low
Low Unemployment 
Inc Standard of Living 
Redistribution of income 
Balance of Payments
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14
Q

What is Economic growth

A

An increase in real GDP

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15
Q

What is Eco growth measured by

A

Real GDP

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16
Q

Is Eco growth Long term or short term

A

Both

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17
Q

To Economically grow you must inc productive capability, how can you do this

A

Work on the 4 Factors of Production

e.g. increase labour supply

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18
Q

When an economy increases its productive capability , is what type of Eco growth

A

Long run

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19
Q

When an economy uses spare capacity , is what type of economic growth

A

Short run

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20
Q

Unemployment definition

A

Where people can work but dont

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21
Q

Why do people not work

A

Not enough jobs
Unskilled or Uneducated
Poor attitudes
People inbetween jobs

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22
Q

What does unemployment cause (5)

A 
Depression 
Low Standard of living 
Crime 
Gov spending on benifits
Fall in income tax - empluyed taxed more
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23
Q

What is inflation

A

The increase in average prices of goods and services over time

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24
Q

What is deflation

A

The fall in the average price of goods and services

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25
Q

What is disinflation

A

Where inflation goes down but prices still go up

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26
Q

Is this an example of disiinflation
Year 1 = £100 inc to £200
Year 2 = £200 inc to £250

A

Yes

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27
Q

What is the UK inflation target

A

2%

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28
Q

What does the Balance of Payments look at

A

The inflows and outflows of an economy

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29
Q

What does Balance of Payments use

A

A current account to measure the amount in and out of an ecomony

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30
Q

What is a Balance of Payments surplus

A

Where export value is greater than import Value

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31
Q

What is a Balance of Payments deficit

A

Import Value>Export Value

32
Q

What indicators are used for inflation

A

CPI and RPI

33
Q

What is RPI

A

Retail Price index, a measure of inflation that includes everything in the rate of inlfation

34
Q

What is CPI

A

Consumer Price Index - Looks at inflation of all types of household spending

35
Q

Does CPI include house prices and related areas

A

No

36
Q

Which inflation rate measure

is used to compare to the rest of Europe

A

CPI - it is easier, as house prices play a huge factor in an economy, yet they are not comparable to other economies prices

37
Q

True or False - CPI causes inflationairy pressure on consumers

A

True

38
Q

How is RPI and CPI calculated

A

By looking at what is commonly most bought, and seeing the change in prices of years

39
Q

Economic growth uses real national income (GDP) - True or False

A

True

40
Q

What type of GDP is this - GDP which measures the value of national output at current prices (no adjustment for inflation)

A

Nominal

41
Q

What type of GDP is this- GDP That measures the volume of output, with adjustments for inflation

A

Real

42
Q

Which GDP is used when looking at eco growth

A

Real GDP

43
Q

What is nominal income

A

Income at current prices ( no adjustment for inflation)

44
Q

What is the formula for converting nominal gdp to real?

A

Nominal GDP of the year x 100/ Price index of current year

45
Q

How is GDP per capita calculated

A

GDP/Population

46
Q

What is GDP per capita

A

The average income of a person within a country

47
Q

Does real GDP take into account inflation

A

Yes

48
Q

What are macroeconomic conflicts

A

Where objectives clash

49
Q

What is a trade off

A

When one objective is chosen over another

50
Q

What is policy conflicts

A

Where two objectives cannot be achieved together

51
Q

In a economic cycle what are the features of a positive output gap?(6)

A 
Low unemployemnt 
Low interest 
Low tax 
higher wages 
more profit
increased prices
52
Q

What are the issues in a positive output gap(3)

A

Increased inflation
Hard to maintain
Higher wages

53
Q

Features of a neagtive output gap(6)

A 
High unemployment 
Increased tax on employed 
Lower wages 
Less profit 
Decreased standard of living 
More money spent on benifits
54
Q

What is a reccesion

A

Where an economy experiences negative growth for 2 or more quarters

55
Q

Features of a recession(5)

A 
Low employment 
Low purchasing 
Bankrupcy 
Loss of homes 
Lack of job availability
56
Q

What are index numbers

A

Numbers that show percentage change

57
Q

When using index numbers, what number is a base year given

A

100

58
Q

Are index numbers percentages

A

Yes

59
Q

What is national income

A

The value of a countries output in a year

60
Q

To produce a National Income what does an economy need(4)

A

National Capital Stock
Human Capital
Land
Entrepreneurship

61
Q

What is national wealth

A

Stcoks of all existing goods and services in an economy - that have value

62
Q

Are consumer goods, capital stock and social stock apart of national wealth

A

Yes

63
Q

Why is investment done

A

To improve efficiency

64
Q

Lack of investment can cause what?

A

Negative eco growth

65
Q

If investment stops what happens

A

Eco capacity and supply decrease

66
Q

What does GNI stand for

A

Gross National Income

67
Q

What is GNI

A

The money UK residents make from foreign assets and busienss investment

68
Q

What is the more accurate view of productivity measures (GNI or GDP)

A

GDP

69
Q

Is GNI an accurate view of Standard of living

A

Yes

70
Q

What are the issues with using National income stats to compare countries standard of living

A

Non monetised economies unaccounted for
Exchange rates
Quality and price changes

71
Q

What does PPP stand for

A

Purchasing Power Parity

72
Q

What is Purchaising power parity used for

A

An economic thoery that compares currencies

73
Q

What approach does Purchaising power parity use

A

A basket of goods approach

74
Q

True or False - Purchaising power parity does not eliminate problems comparing living standards

A

False

75
Q

Issues with using National Income stats to measure Standard of living

A

Hidden Economies
Non monetised economies
Quality changes
Negative externalities

Economics - Ethan Parmar (73 decks)

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