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Political Economy > Macroeconomy > Flashcards

Macroeconomy Flashcards

1
Q

This is the study of the ‘whole’ economy meaning this encompasses…

A

aggregate demand and aggregate supply

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2
Q

Aggregate demand in the economy = spending by … + ….

A

households + injections

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3
Q

Injections are comprised of … (3)

A

Investment, government expenditure and foreign demand for UK goods

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4
Q

Government has 4 aims for the economy as a whole …

A

Economic growth NO1
Low Inflation NO2
Low Unemployment NO3
Trade Balance NO4

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5
Q

NO. 1 Gov tries to increase … … long term

A

economic growth

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6
Q

NO. 1 … output = higher …

A

higher, incomes

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7
Q

NO. 1 The whole point of economic growth is to…

A

Raise the standard of living

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8
Q

NO. 1 Actual growth is the increase in national … from one … to the next

A

output, period

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9
Q

NO. 1 Potential growth is the speed at which the economy could grow if all … are ….

A

resources are employed

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10
Q

NO. 1 If … growth is lower than … growth we would see unemployment and spare capacity

A

actual, potential

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11
Q

NO. 1 During a recession the economy is below the … and … is falling

A

potential, output

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12
Q

NO. 1 IN the long term Gov wants to increase … output

A

potential

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13
Q

NO. 1 Long term growth underpinned by 2 dimensions…

A

increase in resource sand efficiency

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14
Q

NO. 1 resources comes from…

A

natural resources, labour and capital

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15
Q

NO. 1 An increase in the efficiency with which these resources are used, through advances in …, improved … skills or improved …

A

technology
labour
organisation

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16
Q

NO. 1 For the UK high growth is …-…%

A

3-4

17
Q

NO. 1 China and India can grow much faster as they are …

A

LEDC’s

18
Q

NO.2 Inflation is the … rise in … over the last …

A

average
prices
year

19
Q

NO.2Although prices are … …

A

generally

rising

20
Q

NO.2Price rises are measured by the…

A

CPI / Consumer Price index

21
Q

NO.2The basket of goods=

A

collection of food and services used to calculate CPI

22
Q

NO.2… goods and services in … today there are ….

A

150,1947,700

23
Q

NO.2Bread prices have increased …..%

A

1300

24
Q

NO.2Problems with above average inflation (3)

A

Reduces the country’s competitiveness
Reduces the value of savings
Affects certain groups more than others: people on fixed incomes, pensions and savers

25
Q

NO.3 when did UK experience full employment?

A

50s and 60s

26
Q

NO.3 Since then we have seen higher unemployment rates due to …

A

industrial decline; major recessions; welfare dependency; social exclusion)

27
Q

NO.3 Reasons Unemployment is a problem…

A

Effects living standards of employed and their families

It is a waste of resources

Drain of state resources

Social exclusion and social disorder

28
Q

NO.4 Trade Surplus is…

A

Exports higher than imports

29
Q

NO.4 Trade Deficit is…..

A

Imports higher than exports

30
Q

NO.4If a country has a large trade deficit it is…

A

uncompetitive

31
Q

NO.4 a large trade deficit could lead to…

A

currency devaluations and debt

32
Q

No.4 a large trade deficit could also lead to

A

falls in living standards and dependence of foreign creditors

33
Q

NO.4 Secondary objectives of the government are

A

Lower taxes

Lower national debt

34
Q

NO.4 What are the two tools with which the government can affect the whole economy?

A

Monetary policy and Fiscal policy

35
Q

NO.4 Monetary policy is: the government controlling….

A

the value of money through interest rates and the currency

36
Q

NO.4 another method used in monetary policy is…

A

Quantitative easing

37
Q

Fiscal policy: …

A

The Government controls taxes, spending and the public debt

spending influences the economy.

Political Economy (9 decks)

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