Measuring the macroeconomy Flashcards
The main aggregate issues are the following - Economic growth, Inflation, Unemployment and ?
Balance of payments
What is a Business cycle / Economic cycle?
The economic cycle is the cyclical structure of the economy moving through ups and downs rather than a straight trend
An economic downturn is called what?
A recession
Profits usually rise, Wages rise during what period of an economic cycle ?
Boom
In the 20th century, it was believed that during an economic downturn what had to be done to reduce aggregate unemployment?
Increase government spending
What causes inflation?
Economic growth
When is the government’s budget in surplus?
When its revenue is greater than its expenditure
How can the government stimulate the economy?
Use expansionary fiscal policy
What is a tight monetary policy?
When the rate of interest is high, to reduce AD and tighten the economy
The rate of interest and what other monetary tool could be used to expand the economy?
Quantitative easing
What causes higher living standards?
Long term growth
What can help achieve economic growth?
Using more inputs such as capital or by increasing productivity
Labour productivity is important as it increases what?
The amount of outputs that can be produced in a given time by humans which can lead to increased real wages
What is a macroeconomic target?
Targets are what a government aims to achieve in our economy
What are macroeconomic instruments?
Instruments are what can be changed in order to achieve a governments target, such as Bank rate, Gov Spending, Tax Rate
