Macroeconomy Flashcards
This is the study of the ‘whole’ economy meaning this encompasses…
aggregate demand and aggregate supply
Aggregate demand in the economy = spending by … + ….
households + injections
Injections are comprised of … (3)
Investment, government expenditure and foreign demand for UK goods
Government has 4 aims for the economy as a whole …
Economic growth NO1
Low Inflation NO2
Low Unemployment NO3
Trade Balance NO4
NO. 1 Gov tries to increase … … long term
economic growth
NO. 1 … output = higher …
higher, incomes
NO. 1 The whole point of economic growth is to…
Raise the standard of living
NO. 1 Actual growth is the increase in national … from one … to the next
output, period
NO. 1 Potential growth is the speed at which the economy could grow if all … are ….
resources are employed
NO. 1 If … growth is lower than … growth we would see unemployment and spare capacity
actual, potential
NO. 1 During a recession the economy is below the … and … is falling
potential, output
NO. 1 IN the long term Gov wants to increase … output
potential
NO. 1 Long term growth underpinned by 2 dimensions…
increase in resource sand efficiency
NO. 1 resources comes from…
natural resources, labour and capital
NO. 1 An increase in the efficiency with which these resources are used, through advances in …, improved … skills or improved …
technology
labour
organisation
NO. 1 For the UK high growth is …-…%
3-4
NO. 1 China and India can grow much faster as they are …
LEDC’s
NO.2 Inflation is the … rise in … over the last …
average
prices
year
NO.2Although prices are … …
generally
rising
NO.2Price rises are measured by the…
CPI / Consumer Price index
NO.2The basket of goods=
collection of food and services used to calculate CPI
NO.2… goods and services in … today there are ….
150,1947,700
NO.2Bread prices have increased …..%
1300
NO.2Problems with above average inflation (3)
Reduces the country’s competitiveness
Reduces the value of savings
Affects certain groups more than others: people on fixed incomes, pensions and savers
NO.3 when did UK experience full employment?
50s and 60s
NO.3 Since then we have seen higher unemployment rates due to …
industrial decline; major recessions; welfare dependency; social exclusion)
NO.3 Reasons Unemployment is a problem…
Effects living standards of employed and their families
It is a waste of resources
Drain of state resources
Social exclusion and social disorder
NO.4 Trade Surplus is…
Exports higher than imports
NO.4 Trade Deficit is…..
Imports higher than exports
NO.4If a country has a large trade deficit it is…
uncompetitive
NO.4 a large trade deficit could lead to…
currency devaluations and debt
No.4 a large trade deficit could also lead to
falls in living standards and dependence of foreign creditors
NO.4 Secondary objectives of the government are
Lower taxes
Lower national debt
NO.4 What are the two tools with which the government can affect the whole economy?
Monetary policy and Fiscal policy
NO.4 Monetary policy is: the government controlling….
the value of money through interest rates and the currency
NO.4 another method used in monetary policy is…
Quantitative easing
Fiscal policy: …
The Government controls taxes, spending and the public debt
spending influences the economy.
