Macroeconomics 9. The measurement of macroeconomic performance Flashcards

Question

What is a balance of trade surplus?

Answer 1

When the money value of a country’s exports exceeds the money value of its imports

Answer 2

When government spending equals government revenue (G = T)

Answer 3

When government spending equals government revenue (G =T)

Answer 4

Occurs when government spending exceeds government revenue (G > T). This represents a net injection of demand into the circular flow of income and hence a budget deficit is expansionary

Answer 5

Although it may be impossible to achieve two desirable objectives at the same time, e.g. zero inflation and full employment, policy-makers may be able to choose an acceptable combination lying between the extremes, e.g. 2% inflation and 4% unemployment

Answer 6

Occurs when two policy objectives cannot both be achieved at the same time: the better the performance in achieving one objective, the worse the performance in achieving the other

Answer 7

- Between internal policy objectives of full employment and growth and the external objective of achieving a satisfactory balance of payments (or possibly supporting a particular exchange rate) - Between achieving full employment and controlling inflation - Between increasing the rate of economic growth and achieving a more equal distribution of income and wealth Between higher living standards now and higher living standards in the future. This is a example of an 'intertemporal' conflict between enjoying something now, or in the future

Answer 8

Followers of economist John Maynard Keynes, who generally believe that governments should manage the economy, particularly through the use of fiscal policy

Answer 9

Opponents of Keynesian economists, who dislike government intervention in the economy and who much prefer the operation of free markets

Answer 10

The use by the government and its agent, the Bank of England, of interest rates and other monetary instruments to try to achieve the government's policy objectives

Answer 11

The use by the government of government spending and taxation to try to achieve the government's policy objectives

Answer 12

A situation in which a deficit or surplus on the current account of the balance of payments is exactly matched by capital inflows or outflows in the other parts of the balance of payments

Answer 13

- Commonly used to measure the performance of an economy, such as real GDP - Provides information from recent economic performance for judging the success or failure of a particular type of government policy, e.g. fiscal policy or monetary policy - Can be divided into lead and lag indicators - Always presented in the form of statistical data: for example, unemployment and growth figures in the case of lagged indicators and more

Answer 14

To compare the performance of the UK economy with that of competitor countries

Answer 15

They provide information about the future state of the economy, stemming from the way people are currently forming their expectations

Answer 16

Information about the likely state of aggregate demand a few months ahead

Answer 17

They provide information about past and possibly current economic performance and the extent to which policy objectives such as economic growth and control of inflation have been achieved E.g. Data on the level of GD, current and recent employment, and unemployment figures

Answer 18

The accuracy of the statistics available from the government and other sources

Answer 19

A number used in an index, such as the consumer prices index, to enable accurate comparisons over time to be made - Changes in real GDP, and in other economic variables are usually expressed through this

Answer 20

Households to bring forward certain purchases

Answer 21

It's a disincentive to save but it is an incentive to spend

Answer 22

The flow of new output produced by the economy in a particular period e.g. a year, measured, by the flow of factor incomes

Answer 23

The flow of new output produced by different industries in a particular period, e.g. a year

Answer 24

The stock of capital goods, e.g. buildings and machinery, in the economy that has accumulated over time and is measured at a point in time

Answer 25

The skills, knowledge and experience possessed by the population

Answer 26

The stock of all goods that exist at a point in time that have value in the economy

Answer 27

Total planned spending by households on consumer goods and services produced within the economy

Answer 28

All the economic transactions conducted in cash which are not recorded in the national income figures because of tax evasion

Answer 29

- The non-monetised economy - The hidden economy - Quality changes - Negative externalities

Answer 30

- Relative importance of the non-monetised economy - Exchange rates - Traded and non-traded goods

Answer 31

The rates of currency conversion that equalise the purchasing power of different currencies by eliminating the differences in price level between countries