Macroeconomic Trends & Indicators Flashcards
Define the Primary Sector
Industries produce raw materials from Natural environment
Define Secondary Sector
industries that process raw materials
Define Tertiary Sector
goods distribution and service industries
Define Quarternary Sector
industries providing education, training, technology & R&D
Define Quinary Sector
part of the economy that makes top level decisions
What are the 4 factors of production?
Land
Labour
Capital
Enterprise
Difference between wealth and income
Wealth is a stock of financial and real assets and income is money recieved
What is the lorenz curve?
% Income cumulative against the income distribution
Gini Coefficient calculation
area a / (area a+b)
What does a high gini coefficient mean?
Large area represents un-even distribution of income
What makes up the BRICS economies?
Brazil
Russia
India
China
South Africa
Define Globalisation
Describes a way in which various things are becoming more similar around the world.
Define Market Failure
Occurs when freely functioning markets fail to deliver an optimum allocation of resources
Causes of Market Failure - define Externalities
Third-party or spillover effects arising from production and/or consumption of goods & services for which no compensation is paid
Causes of Market Failure - Define Merit Goods
goods & services the provision of which government regards as necessary to avoid under consumption
Define Protectionism
A deliberate attempt to limit imports and promote exports by putting up barriers to trade
Stages of economic cycle & meaning
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
Define ‘A Bubble’
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
Define Base Interest Rate
The rate at which the central bank lends money to banks
What are the types of unemployment & meaning
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
Define Procyclic economic indicator
Directional movement in step with the overall movement of the economy
Define Countercyclic economic indicator
moves in the opposite direction to the economic growth trend
Define Acyclic economic indicator
No relation to the up or down growth phases
Types of Economic indicators
Leading
Lagging
Coincident
What is the Fiscal Policy
Government policy on taxation, public borrowing & public borrowing
Types of Government Fiscal stance - Expansionary
spending more money and financing this through borrowing
Types of Government Fiscal Stance - Contractionary
collecting more in taxes without increasing spending
Define Monetary Policy
concerned with the amount of money in circulation and changes in the price of money
What is the difference between Deflation and Disinflation
Deflation is a fall in price level, disinflation is the reduction in the rate of inflation
What makes up the bank of England framework
Sterling Monetary Framework
Non-Interest Based Facilities
Term-Funding Schemes
Gilt/Corporate Bond Holdings
Short-term non-sterling liquid facilities
How can Inflation be imported
Leakage of sterling from the domestic to foreign markets weakens sterling, causing imports to rise
Examples of Coincident Economic Indicators
GDP
Personal Income
Industrial Production
Retail sales
Why would the governor of the BoE be required to write and open letter to the chancellor of the Exchequer
CPI target has to be within 1% either side of 2% which is the target
