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Econ Theme 4 > Paper 3 > Flashcards

Paper 3 Flashcards

1
Q

Micro causes of income inequality

A
  • education
  • age
  • capital intesnvie production
  • tech
  • flexible labour contracts
  • inheritance
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2
Q

Macro causes of income inequality

A
  • one sector dominance
  • recession; younger/low skill workers laid off quicker
  • globalisation; intl trade, countries loses comp advant
  • FDI: low wages driven down by influx of low skilled immigrants, FDI, competition from trade (lose comp advant or cut costs by lowering wage or firing)
  • corrupt governmet policies
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3
Q

Micro consequences of income inequality

A
  • social cost; negative externality to taxpayer
  • incentive to be educated
  • incentive for entrepeneurship; take risks to get lots of profit so v high income
  • incentive to work to increase income
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4
Q

Macro consequences of income inequality

A
  • gov finances; spending on benefits, less tax
  • living standards
  • asset bubbles (rich invest income, market crash?) and indebtedness (poor have to borrow); both of these lead to financial sector instability
  • growth; growth is limited due to limited spedning pwoer of those with highest MPC
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5
Q

MICRO policies to fix income inequality

A

max/min wage

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6
Q

macro policies to resolve income inequality

A
  • progressive income tax
  • g spend on welfare transfer payment
  • g spend on education/health
  • universal basic income
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7
Q

micro effects of expansionary moentary policy

A
  • impact on savers; erodes savings, ls fall as unemployed, people savign for house, pensioners rely on savings
  • house prices; positive wealth effect
  • firms costs and profitability; costs fall if on variable loans
  • impact on indebted households; monthly repayments of variable loans for, dispo income rises, LS rise
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8
Q

macro effects of expansionary monetary policy

A
  • growth
  • unemployment
  • inflation
  • trade/CA position
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9
Q

micro effetcs of weak exchange rate

A
  • high debt servicing costs; real value of debt falls
  • high prices
  • high costs of production
  • productive/ x inefficiency; exporters can afford to let prices rises abit bc imported competition is weak
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10
Q

macor effects of weak exchange rates

A
  • intl competitiveness
  • increased exports, fall imports, CAD improves
  • imported inflation; cost push
  • greater FDI; lower startup costs an cheaper exports attract fdi
  • EXPORT LED GROWTH sand unemployment
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11
Q

Micro effects of protectionism

A
  • higher prices
  • lower quality
  • producer revenue
  • consumer DWL/producer surplus
  • allocative inefficiency DWL
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12
Q

macro effects of tariffs

A

gov revenue; FUND GOV SPEND; RESOLVE BUDGET DEFICIT
inflation; imported inflation
- CABOP;
- growth; net exports rise assuming export rev stays same, AD increase, growth rise
- employment; protects domestic firms so domestic employment protected

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13
Q

micro effects of NMW

A
  • income ineqlaity reduced and equity improves
  • higher prices. lower consumer surplus (wage price spiral)
  • producer revenue/profit
  • individual impact of job losses
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14
Q

macro effects

A
  • unemployment
  • inflation
  • competitiveness/trade balance
  • government finances
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15
Q

macro effects of unemployment

A
  • lost output
  • government finances
  • hysterersis
  • inflation
  • current account
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16
Q

micro effects of unemployment

A
  • social costs, pressure on public sector services
  • pool of workers for firms
  • individual costs
  • worsening of market failure; drugs alcohol
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17
Q

market based development micro effects

A
  • allocative efficiency
  • dynamic efficiency
  • market failures
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18
Q

market based development policies macro effects

A
  • jobs
  • tax revenue
  • income inequality
  • growth/income/living standard/poverty`
19
Q

micro effects of nationalisation

A
  • allocative efficiency, solve market failure
  • lower prices, higher quality and choice
  • greater economics of scale
  • skills training and productivity
20
Q

macro effects of nationalisation

A
  • government finances
  • employment
  • inefficiency and inflation
  • dynamic efficiency - LRAS
21
Q

macro effects of free trade

A
  • current account deficit potentially
  • AD, growth, unemployment
  • inflation
  • living standards & poverty
  • dynamic efficiency and LRAS
22
Q

micro effects of free trade

A
  • lower prices, consumer surplus
  • quantity/choice
  • competition and static efficeincy
  • tech and costs of production
  • economies of scale
23
Q

macro effects of supply side policies

A
  • growth
  • unemployment
  • inflation
  • current accoutn gov finances
24
Q

micro effects of supply side policies

A
  • productivity
  • stakeholder garm of market based SSPs e,g equity, labour markets
  • competitioj benefits; efficiency
  • risk of monopoly power
  • solve market failures
25
Q

macro effect of growth

A

all macro objectives
- and incomes, LS, poverty

26
Q

micro effects of growth

A
  • market failure - eniviro
  • income inequality
  • profit, DE
27
Q

macro effects of FDI

A
  • growth, unemployment, incomes, LS and poverty
  • inflation
  • BOP
  • tech diffusion and LRAS
  • gov finances
28
Q

micro effect of FDI

A
  • welafre of workers and pay
  • market failures - enviro
  • DE - costs, productivitu
  • competition
29
Q

micro reasons for protectionism

A
  • protect workers
  • protect against dumping
  • protect standards
30
Q

macro reasons for protectionism

A
  • CAD
  • gov revenue from tariff
  • protect against unemployment
  • infant industries and diversification
31
Q

micro causes of CAD

A
  • low productivity
  • high relative min wage
  • strong trade unions
  • resource depletion
32
Q

macro causes of current account deficit

A
  • high growth at home
  • low growth abroad
  • strong exchange rate
  • high relative inflation
  • poor investment
  • loss of comparative advantage
33
Q

micro barriers to development

A
  • low productivity
  • poor ed, health, infrastructure
  • volatile commodity prices
  • resource depletion
  • power of MNCs
34
Q

micro influences on intl competitiveness

A
  • productivity - ULC
  • regulations
  • labour market flexibility
  • competition
  • subsidies
  • investment, r&d,
35
Q

macro influences of intl competitiveness

A
  • tax rates
  • relative inflation
  • exchange rates
  • infrastructure
  • gov finances
  • protectionism
36
Q

micro effcts of fiscal policy

A
  • crowding out (less or more dep on which fiscal policy)
  • solve MF
  • public services impact
  • x inefficiency; opp costs of g spend
  • profits for firms; tax cuts
    ^both xpans and contract
    contract only: inequality from increasing regressive tax and cutting g spend
37
Q

macro effects of fiscal policy

A

expansionary: growth, unemployment, inflations, trade, CA position, gov finances

contractionary: gov finances (confidence and fiscal headroom both improves). inflation, trade, growth unemployment, productive capacity constraints LRAS shifts left

38
Q

micro effcts of market structures

A
  • in terms of all 4 efficiencies
  • anti comp strategies
  • price discimination
39
Q

macro effects of market structures

A
  • de and LRAS
  • jobs
  • prod efficiency and LRAS
  • competitive markets and poverty alleviation as affordability improves and LS improves
40
Q

micro effects of subsidy

A
  • price and CS
  • quality and market failure
  • affordability and equity
  • producer rev and efficiency
  • cost to gov
41
Q

macro effects of subsidy

A
  • protect domestic producers and workers
  • inflation
  • intl comp
  • trade and current accoutn
  • gov finances
  • FDI
42
Q

micro effcts of privatisation

A
  • all efficiencies
  • stakeholdr impacts
  • market failures; e.g cost cutting. ignoring externalities
43
Q

macro effects od privatisation and deregulation

A
  • PE AND DE - link to boosting lras
  • competitive employment or cost cutting leading to unemployment
  • infrastructure building; comp and FDI
  • gov rev by selling of state own assets

Econ Theme 4 (43 decks)

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