review 1 continued Flashcards
opportunity cost
measures the cost of any economic choice in terms if the next best alternative foregone
explain the difference between capital good and consumer goods
capital goods that are used to make consumer goods and services.
consumer goods and services are products which satisfy our needs and wants directly
net immigration
net immigration means that more people are immigrating to a country from overseas than are emigrating from that country
explain the likely impacts of immigration of younger skilled workers on a economy production possibility frontier
the ppf is determined by the factors of production land labour capital and enterprise available to an economy
immigration of skilled workers will cause an increase in the available supply of labour
which will shift the ppf outwards
how is the CPI calculated
basket of good to the family expenditure survey and then compared to a base year being used for a comparison in the index
items are weighted according to proportion of total expenditure on each product
the difference between the clamorous count and ILO
the claimant count does not include people in full time employment if they are seeking part time work and the ILO measure does
state two reason s for frictional unemployment
new workers entering the workforce who have not found a job yet
workers who have left one job and are yet to find another
two limitations of using GDP to compare standard of living between countries
GDP does nit indicate the level of inequality
it does not allow for indicators such as pollution
use the concept of the multiple to explain how an increase in government spending
government spending is an injection into the circular flow
which creates new demand for goods and services
because one persons spending is another so income further rounds of spending are stimulated
creating a bigger final effect on the level of aggregate demand
animal spirits influences the level of bussinesss investments
animal spirits refer to how expectation affect6 the willingness of business to commit funds towards capital investment in their chosen markets
it also explains how the economic cycle could be volatile because of the changing spirits of the businessmen involved rather than because of rational decisions based on calculation of returns
aggregate demand
the total valve of planned expenditure on goods and services within an economy in given period of time
in the short run, a rise in uk budget deficit is most likely to lead to an increase in
inflation
state four most commonly used measures of macroeconomic performance
GDP growth
inflation
unemployment
BOP
explain how indirect tax might be a cause of cost push inflation in an economy
indirect taxes are a cost of production and so shift AS curve inwards which raises the prices level
define the term the rate of employment
the proportion of people available in the labour force aged from 16 to 64 years
who are in work
explain one possible reason for a fall in the rate of employment
a fall in aggregator demand resulting in lower national output;
wages rising above the previous equilibrium
how would an economist define the concept of full employment
when the number of job vacancies equals the number of people actively seeking work
explain two reasons why the Monetary policy committee of the Bank of England introduced quantitive easing
in order to create inflationary pressure at a tike of serve disnflation
to create demand for government bonds
difference between GNP and GNI
GNI is also known as GNP which = GDP plus net property income from abroad. net income from award included interest…
GNP included the value of all goods and services produced but nationals of a country whether in that country or abroad
the current account
an account measurlthe flows of money trade in and out of an economy
the current account measures
trade in goods
trade in services
income
debt repayments
what is the difference between CPIH and CPI
CPIH includes morghates which is most households biggest expense
difference between ILO and claimant count
the claimant count measure unemployment through the number of people claiming job seeker allowance
ILO is a survey. it seeks to measure unemployment by counting the people who have been out of work and have been looking for wok for at leat 4 weeks and are ready to start work in the next 2 week
asymmetric information
where buyers have more information than sellers
symmetric information
where buyers and sellers have the same information
output gap
the difference between actual and potential output
