Macro Year 1 Flashcards
What are the four main macroeconomic objectives?
Low unemployment, low inflation, a balance on the balance of payments and high, stable economic growth
What are the other 3 macroeconomic objectives?
A balance on the budget balance, environmental sustainability and income equality
What is money into the economy called? Give examples of it
Injections. Government spending, export income and investment
What is investment?
The purchase of capital stock
What is money out of the economy called? Give examples of it
Leakages, or withdrawals. Savings, taxes, imports
What is a boom and some features of it?
An expansion in an economy. Rise in employment, rise in inflationary pressure, more confidence and bigger trade deficit
What is a recession and some features of it?
2 consecutive quarters of negative growth.
Increased unemployment, rise in raw material prices, fall in confidence, budget deficit rise
What is GDP and what can it measure?
Measures economic growth, is the total value of goods and services produced within an economy in one year
What’s the difference between GDP and GNI?
GDP - value of output within that country
GNI (Gross National Income) - Includes net income earnings from abroad
What are benefits of economic growth?
Rise in national income, increase in public goods supplied
What are some drawbacks of economic growth?
Increase in inflationary pressures, more environmental damage, income inequality worsens
What is economic growth?
A rise in output, production potential and GDP per capita over time
What is inflation?
The sustained increase of price levels in the economy
What is deflation?
The sustained decrease of price levels in the economy
What is disinflation?
The slow of sustained increase price levels in the economy (inflation at a slower rate)
How is Consumer Price index calculated?
Excludes house prices, council tax, etc. Measures the increase/decrease in prices of 650 commonly bought goods and services from 700 houses
What is demand pull inflation?
Too much demand chasing too little supply (too much money chasing too few goods)
What is cost push inflation?
Producers raising prices and producing less following an increase in production costs
What does inflation create in an economy?
More unemployment and debt is easier to pay back
What are some benefits of inflation?
Can boost growth, increase in the value of stocks, fall in value of debt
What are some disadvantages of inflation?
Uncertainty, can lead to unemployment, reduced investment, reduces savings value
What is unemployment?
Someone who is out of work but willing and able to work