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economics > Macroeconomics Igcse > Flashcards

Macroeconomics Igcse Flashcards

to cover all topics in macroeconomics

1
Q

factors of economic growth( limpdu)

A 
increase in life expectancy
increase in infrastructure
increase in productivity
decrease in unemployment 
increase in migration.
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2
Q

what is economic growth

A

is the increase in the value of goods and services produced within an economy over a period of time

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3
Q

GDP?

A

gross domestic product measures the total no of goods and services produced with an economy over a period of time

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4
Q

problem of GDP

A

statistical errors and the hidden economy

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5
Q

inflation

A

is the avg increase in the price of goods and services being sold within an economy over a period of time

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6
Q

demand-pull inflation

A

demand rises for goods and services from consumers, firms, govs

firms will exploit the rising demand by increasing there prices for their goods and services, as a firm’s main objective is to maximize a profit

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7
Q

cost-push inflation

A

resources become expensive

cost of producing increases

thus the business will produce less and pass the rising cost to their consumers

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8
Q

intrest rates

A

The reward for saving and cost for borrowing

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9
Q

what is unemployment

A

people who are actively seeking for a job and are currently without a job

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10
Q

Types of unemployment

A

fssc

frictional/ sessonal/ structural/cyclical

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11
Q

cyclical unemployment

A

unemployment caused when there is a decline in the economic cycle such as a downturn or recession

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12
Q

frictional unemployment

A

short term unemployment caused when people are between jobs

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13
Q

structural unemployment

A

unemployment caused when theyre is a decline within an industry, such as robots replacing humans, (factor substitution)

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14
Q

seasonal unemployment

A

unemployment due to changes in seasonal demands for goods and services

Ex) such as agricultural goods

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15
Q

Balance of payments

A

A record of all transactions including international trade

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16
Q

Current accounts

A

section of the balance of payments where it records the amount of imports and exports for an individual country

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17
Q

Exports

A

when goods and services are sold overseas

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18
Q

imports

A

when goods and services are brought from overseas

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19
Q

current account surplus

A

exports > imports x>m good

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20
Q

current account deficit

A

imports > exports m

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21
Q

exchange rates

A

the price of one currency in terms of another

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22
Q

SPICEE bad

A

Stronger pound - imports cheaper - exports expensive

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23
Q

wpidec good

A

Weaker pound - imports decrease - exports cheaper

24
Q

Ways businesses damage the environment

A

Water pollution
visual pollution
Air pollution
noise pollution

25
Q

Gov intervention (Mm strips)

A

Maximum pricing - A maximum price occurs when a government sets a limit on the prices of a good or service – with the aim of reducing prices (the government sets a maximum price to allow consumers to purchase these day to day products such as water, rice, etc)

Minimum pricing - A minimum price is set so that firms cannot sell below a certain price. (this is done to prevent people from buying dermit goods)

Subsidies - money that is given by the gov to lower
prices, reduce the cost of producing goods
and therefore increase the supply of goods
and services

Taxation - taxing products increasing prices and
lowering demand

Regulation - fines/ rules
Information - info (advertisement to prevent bad habits)
Pollution permits - to reduce pollution via permits
State provision - free gov services like parks, schools.

26
Q

Absolute poverty

A

is someone who cannot afford the basic needs

27
Q

relative poverty

A

is someone who can afford the basic needs but can be

classified as poor compared to his surroundings

28
Q

Income inequality

A

Is the difference that exits within the people’s income that determines whether they’re rich or poor

29
Q

Government interventions to reduce poverty and income inequality, Stae the three ways (pri)

A

3 ways:

progressive taxation: the more you earn/ make, the more you pay

redistribution through benefits of payments: the government collects taxes through progressive taxation to redistribute it equally amongst its people, as the government main objective is to maximize standards for their citizens

invest in healthcare and education: to provide basic needs to everyone and prevent absolute poverty

30
Q

how do governments redistribute income amongst its citizens

A

by spending it on unemployment, housing, disability allowance, and welfare benefits, as the government main objective is to maximize living standards for its
citizens

31
Q

government policies that affect demand

A

Fiscal policy

Monetary policy

32
Q

what is fiscal policy to do with?

A

government spending and taxations

33
Q

Budget surplus

A

when taxation is greater than government spending

34
Q

Budget deficit

A

when government spending is greater than taxation

35
Q

negatives of a budget deficit

A

Cost increases:

increasing in borrowing
increase in national debt
pay interest
opp.cost

( Ziad, bishr, haram, opp cost)

36
Q

2 types of taxes

A

Direct and indirect tax

37
Q

What is direct tax

A

Direct tax, are taxes imposed on firms and individuals

depending on their income, profit levels and wealth

38
Q

2 types of direct tax

A

income tax - tax depending on a person’s income

co-operation tax - taxes depending on a firms profit they are usually charged a specific amount

39
Q

indirect tax

A

indirect tax, any tax on spendings is called an indirect tax

VAT/GSC
business rates
Duities
council tax

40
Q

why do governments impose taxes

A

discourage people from buying harmful goods
pay for public services
to protect the environment

41
Q

2 types of fiscal policy (Expans and contract)

A

expansionary, (increasing the aggerate demand)

contractionary(reducing the aggerate demand)

42
Q

what is Expansionary fiscal policy

A

Expansionary fiscal policy is related to Budget deficit, where goverment spending is more than taxation

43
Q

expansionary effects on consumers and firms (ad increases, left )

A

A decrease in tax –> consumers have more disposable income –> ad rises

a decrease in cooperation tax –> firms have more money to spend on r&ds, better quality products –> ad rises

Increase in gov spending –> more spending on infrastructure (increase in productivity), subsidies –>
ad rises

44
Q

Contractionary fiscal policy effects on consumers and frims( ad decreases, right)

A

An increase in tax –> consumers have less disposable income –> ad decreases

an increase in cooperation tax –> firms have less money to spend on their businesses, business cost increases–> ad decreases

a decrease in gov spending –> less spending on infrastructure (decrease in productivity), decreasing subsidies –> ad decreases

45
Q

why goverments use Contractionary fiscal policy (ipm)

Budget surplus

A

to reduce inflation
to reduce pollution
to eliminate market failure

46
Q

why goverments use Expansionary fiscal policy (eug)

budget deficit

A

to increase economic growth
to reduce unemployment
to increase GDP

47
Q

what is Contractionary fiscal policy

A

Contractionary fiscal policy is related to budget surplus where taxation is greater than government spending

48
Q

what does budget surplus relate to?

expansionary
contractionary

A

contractionary

49
Q

what does budget deficit relate to?

expansionary
contractionary

A

expansionary

50
Q

2 types of monetary policies

A

increasing the supply of money

changing interest rates to control inflation

51
Q

monetary policy (changing interest rates to control inflation) green left

A

inflation increases above 2 %
central banks will increase interest rates
consumers will spend less and save more
demand for goods and services decreases
firms profit decrease
firms will have lower prices in response to the demand
Inflation falls back to 2 %

52
Q

increasing the supply of money

A

Central banks will buy bonds from commercial banks

Commercial banks will receive money in exchange for the bonds

Commercial banks will have more money to spend on the consumers and firms

As a result consumers and firms have more money entering the economy

more money enters the economy improving, GDP, economic growth, reducing unemployment

53
Q

why are supply-side policies used

A

policies that are used to increase aggregate supply within an economy

54
Q

aggerate supply

A

the total no of good and services produced by all firms within an economy

55
Q

how are supply-side policies used (increase)

A

supply-side policies are policies that increase the quantity or quality of the factors of production

factors of production (land, labor, capital, and
enterprise)

56
Q

supply-side policies (pet-tax)

A

privatization ( increases the quality of workers)

Spend more on education and training ( increases supply of workers)

lower income tax to encourage workers (Quantity)
lower business tax to encourage employment (Quantity)

57
Q

improving labor productivity (Wtfq)

A

improving flexibility- (new laws to weaken trade unions)
lowering taxes
increase workload- (raise the retirement age and encourage immigration)
improving labor quality

economics (5 decks)

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