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Chpt 1 - CISI > Macroeconomic Trends & Indicators > Flashcards

Macroeconomic Trends & Indicators Flashcards

1
Q

Define the Primary Sector

A

Industries produce raw materials from Natural environment

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2
Q

Define Secondary Sector

A

industries that process raw materials

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3
Q

Define Tertiary Sector

A

goods distribution and service industries

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4
Q

Define Quarternary Sector

A

industries providing education, training, technology & R&D

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5
Q

Define Quinary Sector

A

part of the economy that makes top level decisions

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6
Q

What are the 4 factors of production?

A

Land
Labour
Capital
Enterprise

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7
Q

Difference between wealth and income

A

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

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8
Q

What is the lorenz curve?

A

% Income cumulative against the income distribution

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9
Q

Gini Coefficient calculation

A

area a / (area a+b)

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10
Q

What does a high gini coefficient mean?

A

Large area represents un-even distribution of income

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11
Q

What makes up the BRICS economies?

A

Brazil
Russia
India
China
South Africa

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12
Q

Define Globalisation

A

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

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13
Q

Define Market Failure

A

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

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14
Q

Causes of Market Failure - define Externalities

A

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

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15
Q

Causes of Market Failure - Define Merit Goods

A

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

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16
Q

Define Protectionism

A

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

17
Q

Stages of economic cycle & meaning

A

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

18
Q

Define ‘A Bubble’

A

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

19
Q

Define Base Interest Rate

A

The rate at which the central bank lends money to banks

20
Q

What are the types of unemployment & meaning

A

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

21
Q

Define Procyclic economic indicator

A

Directional movement in step with the overall movement of the economy

22
Q

Define Countercyclic economic indicator

A

moves in the opposite direction to the economic growth trend

23
Q

Define Acyclic economic indicator

A

No relation to the up or down growth phases

24
Q

Types of Economic indicators

A

Leading
Lagging
Coincident

25
Q

What is the Fiscal Policy

A

Government policy on taxation, public borrowing & public borrowing

26
Q

Types of Government Fiscal stance - Expansionary

A

spending more money and financing this through borrowing

27
Q

Types of Government Fiscal Stance - Contractionary

A

collecting more in taxes without increasing spending

28
Q

Define Monetary Policy

A

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

29
Q

What is the difference between Deflation and Disinflation

A

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

30
Q

What makes up the bank of England framework

A

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

31
Q

How can Inflation be imported

A

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

32
Q

Examples of Coincident Economic Indicators

A

GDP
Personal Income
Industrial Production
Retail sales

33
Q

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

A

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

Chpt 1 - CISI (7 decks)

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