Objectives of government economic policy 4.2.(1).1 Flashcards
What is economic growth?
The annual percentage increase in real GDP
What is price stability?
Having a low level of inflation (high levels of inflation and deflation cause other problems in an economy)
What is unemployment?
When a person is not in employment, education or training and is actively seeking employment whilst claiming JSA.
Why does the Government want low levels of inflation?
People working spend more, which creates demand in the economy.
What is the Government budget position?
The difference between the money received from tax rev and amount spent giving financial aid.
What is the balance of payments?
Difference between the money coming into the country from the sale of exports and money leaving the country to pay for imports.
What is a budget deficit?
When government spending is greater than tax revenue.
What is a budget surplus?
When gov spending is less than tax rev
What is a BoP surplus?
when the value of exports is greater than the value of imports
What is a BoP deficit?
When the value of exports is less than the value of imports
What is productivity?
a measure of total output per worker in a given time period
What are the three parts of the BoP?
the current account, capital account and the financial account
What are the four parts of the Current Account?
the Visible Balance, Invisible Balance, Primary balance and the Secondary balance
What is the Visible balance?
the difference between the value of goods exported and the value of goods imported
What is the Invisible balance?
the difference between the value of services exported an the value of services imported
What is the Balance of trade?
Visible balance + Invisible balance
What is the Primary balance?
difference between profits from UK firms overseas coming into the UK and profits from overseas firms leaving the UK
What is the Secondary balance?
money moving between countries with no corresponding trade e.g. foreign aid
