Macroeconomic Trends & Indicators

Question 1

Define the Primary Sector

Answer 1

Industries produce raw materials from Natural environment

Question 2

Define Secondary Sector

Answer 2

industries that process raw materials

Question 3

Define Tertiary Sector

Answer 3

goods distribution and service industries

Question 4

Define Quarternary Sector

Answer 4

industries providing education, training, technology & R&D

Question 5

Define Quinary Sector

Answer 5

part of the economy that makes top level decisions

Question 6

What are the 4 factors of production?

Answer 6

Land
Labour
Capital
Enterprise

Question 7

Difference between wealth and income

Answer 7

Wealth is a stock of financial and real assets and income is money recieved

Question 8

What is the lorenz curve?

Answer 8

% Income cumulative against the income distribution

Question 9

Gini Coefficient calculation

Answer 9

area a / (area a+b)

Question 10

What does a high gini coefficient mean?

Answer 10

Large area represents un-even distribution of income

Question 11

What makes up the BRICS economies?

Answer 11

Brazil
Russia
India
China
South Africa

Question 12

Define Globalisation

Answer 12

Describes a way in which various things are becoming more similar around the world.

Question 13

Define Market Failure

Answer 13

Occurs when freely functioning markets fail to deliver an optimum allocation of resources

Question 14

Causes of Market Failure - define Externalities

Answer 14

Third-party or spillover effects arising from production and/or consumption of goods & services for which no compensation is paid

Question 15

Causes of Market Failure - Define Merit Goods

Answer 15

goods & services the provision of which government regards as necessary to avoid under consumption

Question 16

Define Protectionism

Answer 16

A deliberate attempt to limit imports and promote exports by putting up barriers to trade

Question 17

Stages of economic cycle & meaning

Answer 17

Recovery - The economy is growing
Peak - The highest point of the cycle
Slump - The economy slows due to a reduction in demand
Trough - hit bottom of next cycle

Question 18

Define ‘A Bubble’

Answer 18

A sharp rise in the price of an asset or a range of assets in a continuous process, with the initial rise generating expectations of further rises

Question 19

Define Base Interest Rate

Answer 19

The rate at which the central bank lends money to banks

Question 20

What are the types of unemployment & meaning

Answer 20

Cyclical - Occurs as a result of market cycle
Frictional - Occurs as a result of individuals in process of changing jobs
Structural - occurs due to a difference in what individuals can offer and what companies need
Gig Economy - amount on zero hour contracts

Question 21

Define Procyclic economic indicator

Answer 21

Directional movement in step with the overall movement of the economy

Question 22

Define Countercyclic economic indicator

Answer 22

moves in the opposite direction to the economic growth trend

Question 23

Define Acyclic economic indicator

Answer 23

No relation to the up or down growth phases

Question 24

Types of Economic indicators

Answer 24

Leading
Lagging
Coincident

Question 25

What is the Fiscal Policy

Answer 25

Government policy on taxation, public borrowing & public borrowing

Question 26

Types of Government Fiscal stance - Expansionary

Answer 26

spending more money and financing this through borrowing

Question 27

Types of Government Fiscal Stance - Contractionary

Answer 27

collecting more in taxes without increasing spending

Question 28

Define Monetary Policy

Answer 28

concerned with the amount of money in circulation and changes in the price of money

Question 29

What is the difference between Deflation and Disinflation

Answer 29

Deflation is a fall in price level, disinflation is the reduction in the rate of inflation

Question 30

What makes up the bank of England framework

Answer 30

Sterling Monetary Framework Non-Interest Based Facilities Term-Funding Schemes Gilt/Corporate Bond Holdings Short-term non-sterling liquid facilities

Question 31

How can Inflation be imported

Answer 31

Leakage of sterling from the domestic to foreign markets weakens sterling, causing imports to rise

Question 32

Examples of Coincident Economic Indicators

Answer 32

GDP Personal Income Industrial Production Retail sales

Question 33

Why would the governor of the BoE be required to write and open letter to the chancellor of the Exchequer

Answer 33

CPI target has to be within 1% either side of 2% which is the target