Macroecons Flashcards
Economic growth definition
increase in RNY/ouput of an economy over a specific time period (usually a year)
Economic growth measurement
% change of an economy’s real GDP
Sustained economic growth
Econ growth sustained over an extended period of time without inflationary measures (both AG PG happens)
Sustainable economic growth
Rate of econ growth that can be maintained without causing any significant economic problems for future generations
Inclusive econ growth
econ growth is sustained and broad based across economic sectors and creates productive employment opportunities for the majority of the country’s population
(for SG: equitable distribution of Y)
GDP
Total mkt value of all g+s newly produced within the geographical boundaries of an economy in a given period of time
Real GDP eqn
nominal GDP/GDP deflator x100
Change in real GDP eqn
% change nominal GDP - % inflation rate
GDP per capita eqn
Real GDP/pop size
Gross national income GNI
Real GNI= Real GDP+net factor from abroad (basically Factor Y from overseas-fact Y to overseas(non residents))
Real GDP growth rate
Real GDP(this year)- Real GDP(last year)/Real GDP(last year) x100
Material SOL
Quality and quantity of goods and services available for consumption by residents in a country
NMSOL
intangible aspects that enable residents in a country to enjoy a fulfilling life
GINI coeff
close to 1 is very inequal
Uemployment
situation where people are unable to find employment even though they are of legal working age and are both capable and willing to work at current wage rates
*3 types of UN
DD-def: DD decrease, decline business revenue, lay off workers to maintain profit margins
Structural: mismatch of skills, cannot immediately take up jobs
Frictional: result of mkt imperfections, jobless while looking for a new one after quitting
UNEM rate eqn
no of unem/labour force x 100
Price stability definition
GPL of g+s in an economy, low and stable inflation
Price stability measurement
Consumer price index CPI
CPI eqn
Inflation rate= CPI this year-CPI last year/ CPI last year x100
Balance of trade definition
Trade of all g+s between residents on of a country and the rest of the world
BOT eqn
X-M
Balance of payments
statement of receipts for all econ transactions between residents of a country and the rest of the world over a period of time (usually a year)
BOP inflow
Credit items
BOP outflows
debit items
AD aggregate DD
total level of spending in an economy at each GPL. Shows the amt of domestically produced g+s which households firms governments and foreigners are wiling to buy at each GPL
C expenditure
disposable Y households spend on consumer g+s to satisfy current wants
I expenditure
expenditure on new captital assets
G expenditure
Spending by gov on g+s for current consumption or expanding the productive capacity of its econom
AS aggregate SS
shows total domestic output of g+s that firms collectively are willing to produce at each GPL
Multiplier effect
Is a numerical coeff for which a change in autonomous spending C I G (X-M) is multiplied to show the final change in eqm level of Real national output
k eqn
k=1/MPS+MPT+MPM=1/MPWithdrawals=1/MPC
Injections J
Y received by om firms that do not arise from dom household consumption
Withdrawals W
circular flow refer to household income that is not spent on domestic G+S
Actual growth
annual % increase in RN ouutput produced
Potential growth
annual % increase in capacity of economy to produce
Recession
Economy suffers from fall in RNY for at least 2 consecutive quarters
Inflation
sustained rise in GPL of a given basket of goods and services in an econ over time (usually a year)
CPI
weighted ave of the price of a basket of g+s purchased by the average household in a specific time period (usually a year)
Deflation
Sustained decrease in the GPL of the economy
fiscal policy
DD management policy that works via Gov expenditure G and Taxation T to influence AD and eventually RNY/output/employment/GPL
Progressive tax
higher Y group taxed a higher proportion of Y than the lower Y group
Regressive tax
Lower income group is taxed a higher prop of Y than high Y groups
Indirect tax
tax on expenditure of g+s
direct tax
based on Y and wealth
Monetary policy
DD management policy that works using IR and ER to influence AD and eventually RNY/ouput/employment/GPL
Appreciation of currency
Ext value increases relative to foreign currency, same unit of dom currency can be exchanged for more units of foreign currency
Depreciation of currency
Economic growth
