multiple choice 1 + 2 Flashcards
what do we measure growth with?
changes in real GDP
what does it mean if actual growth is below trend growth?
unemployment
the economy is slow
why does unemployment carry an opportunity cost?
the unemployed do not produce any output
inflation is where…
… general price levels rise
what does BOP tell us?
what we export and import
what is corporation tax?
tax on profit
what does cutting taxes encourage?
economic activity
for people to stay in the country and to produce more
what is a transfer payment?
payments from government to the BENEFIT recipients
examples of transfer payments?
housing benefit
unemployment benefit
pensions
what would reduce the size of the hidden economy (avoiding tax paying)?
rising penalties for tax evasion
reduction in number of activities known as illegal
what is the difference of deflation and disinflation?
deflation is prices falling
disinflation is the inflation rate falling so the rate inflation is running at is slower
what do the weights in the retail price index indicate?
the relative amount spent on each product
what does the CPI exclude?
the CPI index excludes housing costs
why might the claimant count and ILO survey not match?
some unemployed people do not claim benefits
what is a budget deficit?
we spend more than we receive in tax
