macroeconomic objectives, inflation, unemployment

Question 1

total expenditure or demand in macroeconomy formula

Answer 1

consumer expenditure + investment expenditure + public sector expenditure +
net exports (exports-imports)

Question 2

list 2 macroeconomic aims some govs may have

Answer 2

to reduce poverty and inequalities in income and wealth

to reduce pollution and waste, protect the natural environment and therefore encourage more sustainable econ growth

Question 3

what is aggregate demand

Answer 3

total demand for goods and services within a particular market

Question 4

what is aggregate supply

Answer 4

the total supply of goods and services available to a particular market from producers

Question 5

what is inflation

Answer 5

a general and sustained rise in the price levels of goods and services

Question 6

what is hyperinflation

Answer 6

runaway inflation during which prices rise at phenomenal rates and money becomes almost worthless

Question 7

cpi formula

Answer 7

WAP yr 1/WAP base yr x 100

Question 8

inflation from base year formula

Answer 8

cpi year - cpi base year

Question 9

inflation between years formula

Answer 9

CPI Year 2 - CPI Year 1/CPI Year 1 x 100

Question 10

what is the main cause of inflation

Answer 10

if the money supply increases at a faster rate than the aggregate supply of goods and services then the glp will rise

Question 11

what r the 2 types of inflation

Answer 11

demand pull inflation, cost push inflation

Question 12

what is demand pull inflation

Answer 12

caused by aggregate demand rising faster than the aggregate supply of goods and services

Question 13

what is cost push inflation

Answer 13

caused by rising wages and other production costs, firms will raise their prices to cover these additional costs

Question 14

what is imported inflation

Answer 14

inflation caused by rise in import prices

Question 15

when can import prices rise

Answer 15

a fall in the exchange rate of the importing country

Question 16

when is demand pull inflation most likely

Answer 16

when there is full employment of resources and when aggregate supply is inelastic

Question 17

list 2 benefits of low and stable price inflation

Answer 17

encourages consumers to buy goods and services sooner rather than later

reduces the real cost of loan repayments

Question 18

what is stagflation

Answer 18

an economic situation when unemployment and inflation r both high and/or rising

Question 19

what is disinflation

Answer 19

slowdown in the rate at which prices r rising in general

Question 20

what is deflation

Answer 20

involves a continuous decline in the general level of prices in an economy

Question 21

what is malign deflation

Answer 21

when falling product prices become widespread and prolonged due to a slump in aggregate demand

Question 22

what does the labor force participation rate measure

Answer 22

the percentage of the population of working age that is economically active ie either in work or looking for work

Question 23

what is unemplyoment

Answer 23

unemployment occurs when a person who is part of labor force and who is actively searching for employment, is unable to find work

Question 24

what is unemployment often used as

Answer 24

measure of the health of the economy

Question 25

unemployment rate formula

Answer 25

number unemployed/labor force * 100

Question 26

what r the 4 types of unemployment

Answer 26

frictional, seasonal, cyclical, structural

Question 27

what is frictional unemployment

Answer 27

short lived unemployment as ppl change jobs

Question 28

what is seasonal unemployment

Answer 28

temp. unemployment because some production and consumer demand is seasonal

Question 29

what is cyclical unemployment

Answer 29

prolonged widespread unemployment during an economic recession due to falling and depressed AD

Question 30

what is structural unemployment

Answer 30

long lived unemployment caused by industrial decline

Question 31

list 2 types of labor immobility

Answer 31

occupational
geographic

Question 32

what is occupational immobility

Answer 32

inability to move to a new occupation because a worker lacks transferable skills

Question 33

what is geographic immobility

Answer 33

inability to move location because of family ties and commitments or regional differences in house prices make it unaffordable

Question 34

list 2 personal costs of unemployment

Answer 34

• loss of income
• possible loss of self esteem, leading to depression, health and marriage problems

Question 35

list 2 governmental costs of unemployment

Answer 35

• loss of income tax revenue
• higher public spending on unemployment and welfare benefits

Question 36

list 2 economical costs of unemployment

Answer 36

• output is lower than what it could be
• taxes may have to rise to pay for increased welfare payments.

Question 37

what r some positive consequences that benign deflation can have (2)

Answer 37

reduced the cost of goods such as mobile phones, cars and clothing over time in many countries.

it increases purchasing power and consumers

Question 38

causes of benign deflation (4)

Answer 38

increased competition, productivity, supply and technology