Measurement of macroeconomic performance Flashcards
1
Q
Economic growth
A
- UK long-run trend rate of growth in 2.5%
- Gov. aim to have sustainable long run economic growth
- in emerging markets + developing economies gov. aim to increase economic development before growth.
2
Q
minimising unemployment
A
- Gov. aim to have full employment
- Account for frictional unemployment for aiming unemployment at 3%
- Labour force employed in productive work
3
Q
Price Stability
A
- Inflation target 2% - measured with CPI
- aims to provide price stability for firms and consumers
4
Q
Stable balance of payment on current account
A
- aim for current account to be satisfactory
- not a large deficit
- equilibrium means country can sustainably fund the current account
5
Q
Balanced gov. budget
A
- Keeps control of state borrowing
- National debt does not escalate
- allow gov. to borrow cheaply
- makes repayments cheaper
6
Q
Greater income equality
A
- Income and wealth should be distributed equitably
7
Q
5 Conflicts
A
Economic growth Vs Inflation
Economic growth Vs current account
Economic growth Vs budget deficit
Economic growth Vs environment
Unemployment Vs inflation
8
Q
Economic growth Vs Inflation
A
- Growing economy is likely to experience inflationary pressures
- especially with a positive output gap
- or when AD is growing faster than AS
9
Q
Economic growth Vs current account
A
- During high growth, high consumption
- UK high marginal propensity to import
- worsening of the current account deficit
10
Q
Economic Growth Vs budget deficit
A
- Reducing deficit requires less expenditure or more tax revenue
- Less AD less economic growth
11
Q
Economic Growth Vs environment
A
- high economic growth - high expenditure
- (More manufacturing)
12
Q
Economic Growth Vs inflation
A
- trade off between level of unemployment + inflation rate
- As economic growth increases
unemployment falls due to more jobs
wages rise
consumption rises
inflation
