Macroeconomics for 31st Jan Macro BT Flashcards
Economic growth
Increase in real GDP
Price stability
When inflation is low and stable. UK target is at 2%.
Unemployment
The number of people actively seeking employment but are unable to find work.
BoP
Ensuring exports and imports are balanced, reducing deficits or surpluses on the current account.
AD
Total spending on goods and services in the economy at a given price level
AD =
C + I + G + (X - M)
C - Consumption
I - Investment
G - Government Spending
X - Exports
M - Imports
LRAS
Determined by factors like productivity, technology, and institutional structure.
SRAS
Changes in costs of production. (wages, raw materials, taxes) will shift the curve.
Shift in AD
Caused by changes in C, I, G, X and M
Shift in AS
Caused by changes in costs of production or productivity, technology, and labour mobility.
Short Run economic growth
Caused by increased utilization of existing resources (e.g, demand - side policies)
Long Run Economic Growth
Sustained by increasing productive capacity (e.g, investment in tech and education).
Boom
High growth, low unemployment, inflationary pressures
Recession
Negative growth, high unemployment, deflation risk.
Recovery
Positive growth resumes.
Slump
Low growth, high unemployment, stagnation.
Positive output gap
Actual GDP > Potential GDP
Negative Output Gap
Actual GDP < Potential GDP
NI Data
Total value of goods and services produced in the economy in a given time period