Macroeconomics, Part 6- The Measurement of Macroeconomic Performance Flashcards
What is the demand for labour derived from?
The demand for the goods and services that that labour produces.
What are the 6 main objectives of a government’s macroeconomics policy?
- Stable prices (2% pa)
- Steady economic growth (2.25% pa)
- Full employment
- Favourable balance of payments (lots of exports, not many imports)
- Fairer distribution of income and wealth
- Reducing the government budget deficit and the national debt
What are stable prices?
When average prices are constant over time or the level of increase is low and predictable.
What is steady economic growth?
An increase in the economy’s level of real output and an outward shift of the economy’s production possibility frontier.
What is a balance of payments?
The difference between the value of our imports and the value of our exports.
What is income?
A flow.
What is wealth?
A stock.
What is budget deficit?
When government spending exceeds government revenue.
What is national debt?
The stock of all past central government borrowing that has not been paid back. It is the accumulation of budget deficit.
What is there when exports are greater than imports?
A surplus.
What is there when imports are greater than exports?
A deficit.
Disposable income definition:
Income after tax has been deducted and benefits have been added.
Index definition:
A system for showing average movements in a range of items.
What is the link between expenditure, output and income?
They are all the same amount in each country.
How does lowering income tax increase employment?
- A lower tax means people have more disposable income
- So they spend more
- So the demand is higher
- So more staff are needed
- Therefore employment increases.
