MACROECONOMICS Flashcards
What is consumer confidence?
How average individuals feel about their current and future situation
What is a tariff?
Tax placed on an imported good into a country
What happens to the AD curve when AD rises?
AD shifts to the right
What is debt (govt debt)?
The accumulation of previous deficits
What are the 3 ways of reducing the budget deficit?
- Borrowing (bonds)
- sell govt assets
- Use surplus from previous years
What is the aggregate demand curve?
Shows the level of planned demand for real output consistent with a price level
What factors affects Imports as a component of AD?
- exchange rates
- domestic tarrifs
- stage of econ cycle locally
What factors affects exports as a component of AD?
- Stage of the econ cycle abroad
- tariffs
•exchange rate
What factors affects Investment spending as a component of AD? (4)
- spare capacity in the economy
- interest rates
- Corporation tax rates
- employment levels
What factors affects Gov spending as a component of AD? (3)
- unemployment levels
- Tax revenue
- population growth
What factors affects consumption as a component of AD?
- Interest rates
- income levels
- consumer confidence
- stage of econ cycle
- income tax rates
What are the 3 ways of measuring national income?
Income, expenditure, output
What are the stages of the economic trade cycle?
Downturn, recession, recovery, peak/boom
What are the factors for production?
Land, labour, enterprise, capital
What is the income method?
Wages
Interest
Rent
Profits/dividends
What is the AD formula?
AD = C + I + G + (X-M)
What is GDP?
Per capita?
Value of total output in a year
Divided by the population
What is another term for total spending?
Aggregate Demand
What are the 3 injections?
Government spending
Exports
Bank loans/investment
What is nominal economic growth?
The percentage increase in GDP from one year to the next
What is the expenditure method?
Government spending
Consumption
Investment spending
Net exports
What is the real economic growth calculation?
Nominal - inflation
What are the 3 withdrawals?
Taxation
Savings
Imports
What does ceteris parabus mean?
All other things remain equal
The demand for labour…?
Is derived from the demand for the goods and services that labour produces
What are the signs of changes in the economic cycle?
Economic downturn
Increase in unemployment
Falling AD
Reduced output
Falling tax revenues
Increased govt spending on benefits
Stock market falls
Reduced cc.
Order books of firms get emptier
What are the government economic objectives in a mixed economy?
- Encouraging price stability
- favourable balance of payments on the current account
- Promoting steady economic growth
- Redistributing income and wealth more equitably
- Reducing national debt and govt budget deficit
- Ensuring working population is productive.
What is an exchange rate?
The value of one currency in terms of another
What does SPICED stand for?
Strong
Pound
Imports
Cheap
Exports
Dear
What does WPIDEC stand for?
Weak
Pound
Imports
Dear
Exports
Cheap
What are shifts in short run aggregate supply?
- input costs
- Business taxes / subsides / imported costs
- supply shocks
What are some external factors affecting AS?
- World oil and gas prices
- energy prices /costs
- other mineral /metal prices
- foodstuff prices
- import tariffs /quotas
