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Macroeconomics > Measures of economic importance > Flashcards

Measures of economic importance Flashcards

1
Q

what are the factors of production

A

Capital
Enterprise
Labour
Land

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2
Q

what are factor incomes

A

Interest
Profits
Wages
Rent

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3
Q

examples of transport payments

A
  • unemployment benefits
  • state pension
  • tax credit
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4
Q

what are the three leakages in the circular flow of income

A

Imports
Taxes
Savings

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5
Q

what are the three injections in the circular flow of income

A

Exports
Government Spending
Investments

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6
Q

what are exports

A

spending by foreigners in goods and services made in the uk

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7
Q

who spends on investment

A

firms

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8
Q

what is GDP

A

the value of all then goods and services produced in an economy

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9
Q

what is the nominal value

A

provides a measure in simple monetary terms

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10
Q

what is the real value

A

this provides a measure where the nominal value has been adjusted for inflation

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11
Q

what is the total

A

provides an overall aggregate total

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12
Q

what does per capita mean

A

divides the total by population

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13
Q

what are some criticisms of GDP

A
  • does not take into consideration health, education and social structure
  • quality of life not measured
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14
Q

what is GNI

A

gross national income - measures income, wages, services and investments generated by the countries citizens

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15
Q

what is GNP

A

gross national product - the market value of all the goods and services produced in one year by labour + property supplied by the citizens of a country

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16
Q

what is HDI

A

human development index - measures a broader definition of well-being and provides a composite measure of 3 basic dimensions of human development

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17
Q

what is GPI

A

genuine progress indicator - takes everything that GDP uses into account but adds other figures that that represent the cost of the negative effects related to economic activity

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18
Q

what is HPI

A

human poverty index - concentrated in the deprecation in the 3 elements of human life

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19
Q

what is the Gini Coefficient

A
  • differences in national income equality around the word
  • between 0 - 1
  • 0 = perfect equality
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20
Q

what is the easterlin paradox

A

states that a point in time happiness values are directly proportional with income but over time the long-term growth rates of happiness and income are not significantly related

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21
Q

what are the two measures of unemployment

A
  • claimant count
  • uk labour force survey
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22
Q

what is the claimant count

A
  • this provides monthly data regarding the number people claiming JSA
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23
Q

what does JSA stand for

A

Job seekers allowance

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24
Q

define unemployment

A

actively seeking employment

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25
Q

conditions of JSA

A
  • attending a session with a ‘work coach’ at a DWP office
  • must be seeking work
  • must complete online tasks to prepare for interviews
  • work a maximum of 16 hours per week
  • have less than 16,000 in savings
26
Q

what does economically inactive mean

A

the people are neither employed nor unemployed. they are not seeking work or available to start work. they are not included in unemployment data

27
Q

what does the amount of JSA depend on

A

the system is a contribution - based, depending on how much National Insurance has been paid by the worker during the previous two years

28
Q

limitations on the claimant count

A
  • stigma attached to claiming benefits
  • stricter eligibilty
29
Q

what does underemployment mean

A

workers who may not fully utilise their skill set or the worker may be working fewer hours than they would like

30
Q

what is the concept of hysteresis

A

current and future value will be impacted by historical events

31
Q

how does hysteresis work when applied to unemployment

A

the longer somebody is unemployed, the harder it is for them to find work

32
Q

what are the 6 types of unemployment

A
  1. frictional
  2. cyclical
  3. structural
  4. natural
  5. seasonal
  6. real wage
33
Q

what is frictional unemployment

A

unemployment caused by individuals searching for work, or waiting to start a new job

34
Q

what is cyclical unemployment

A

unemployment caused by changes in the business cycle. labour is a form of derived demand therefore is there is a recession and demand for goods and services fall there will be a fall in demand for labour

35
Q

what is structural unemployment

A

combination of occupational and geographical immobility of labour. caused by changes in the structure of an economy

36
Q

what is natural unemployment

A

combination of frictional and structural unemployment. it is the lowest level of unemployment a health economy can sustain without causing inflation

37
Q

what is seasonal unemployment

A

temporary work that is created and then lost when there is change in seqsons

38
Q

what is real wage unemployment

A

occurs when real wages are too high

39
Q

what is the labour force survey unemployment count

A
  • a person aged 15 or over without a job during a given week
  • available to start a job within the next two weeks or actively having sought employment during the last 4 weeks
40
Q

what are the 4 components of the balance of payments

A
  1. current account
  2. financial account
  3. capital account
    4: net errors + omissions (balancing tools)
41
Q

what are the 4 components of the current account

A
  1. trade in goods
  2. trade in services
  3. investment income
  4. transfers
42
Q

what are the three components of the financial account

A
  1. portfolio investment
  2. foreign direct investment
  3. reserve
43
Q

name three examples of portfolio investment

A
  • bonds
  • derivatives
  • shares
44
Q

examples of a reserve

A
  • gold
  • currency
45
Q

what components make up the trade balance of the current account

A
  1. trade in goods
  2. trade in services
46
Q

what components make up the income balance of the current account

A
  1. investment income
  2. transfers
47
Q

what is a current account deficit

A

value of M > value of X

48
Q

what is a financial account deficit

A

spend more in portfolio investment in foreign countries than their own

49
Q

what is a current account surplus

A

value of M < value of X

50
Q

what is a financial account surplus

A

spend more in portfolio investment in their own country rather than foreign countries

51
Q

reasons for a current account surplus

A
  • low valued exchange rate
  • competitiveness
  • high domestic saving ratio
  • protectionism
  • foreign direct investment
52
Q

why does a low values exchange rate cause a CA surplus

A

exports are more price competitive

53
Q

why does competitiveness cause a CA surplus

A

low unit labour costs from high productivity means lower prices. dynamic efficiency would mean higher quality

54
Q

why does a high domestic saving ratio cause a CA surplus

A

increased saving of people wi mean less demand for imports. if MPM is low then a current account surplus in more likely

55
Q

why does protectionism cause a CA surplus

A

tariffs, quotes and regulations may reduce the levels of imports

56
Q

why does foreign direct investment cause a CA surplus

A

foreign companies invest in a country and then export to the rest of the world. inflow to FA - profits being sent back to the country of origin would be CA outflow

57
Q

reasons why a financial deficit isn’t always bad

A
  • if the exchange rate is weak: CA deficit can self-correct itself into a surplus - if defective is caused by an increase in imports, the supply of the currency will increase
  • leads to an increase in exports therefore self-correcting the CA deficit into a surplus
58
Q

describe the J curve

A
59
Q

what does the j curve depend on

A

if the marshall-lerner condition is true

60
Q

what is the marshall- lerner condition

A

PED of X + M > 1

Macroeconomics (12 decks)

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