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Economics AL Flashcards > T2.1.1-2.1.2: Economic Growth/ Inflation > Flashcards

T2.1.1-2.1.2: Economic Growth/ Inflation Flashcards

1
Q

What is the Big Mac index?

A

A way of measuring Purchasing Power Parity (PPP) between different countries by converting the average national Big Mac prices to U.S. dollars.

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2
Q

What does the BRICS grouping represent?

A

Brazil, Russia, India, China, and South Africa, which are emerging markets with a bigger share of world trade than the USA.

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3
Q

What do constant prices indicate?

A

That the data has been inflation adjusted.

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4
Q

What does long-run economic improvement refer to?

A

Improvements in income per capita, education, health outcomes, and reductions in extreme poverty, hardship, and inequality.

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5
Q

What is real GDP growth?

A

An increase in the real value of goods and services produced, measured by the annual % change in real GDP.

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6
Q

What are unpredictable events in economics?

A

Events such as volatile global prices for oil, gas, and foodstuffs.

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7
Q

What does economic stability refer to?

A

When growth, prices, and unemployment do not change much from one year to another.

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8
Q

What is the term for financial markets of developing countries?

A

Emerging markets.

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9
Q

What is full employment GDP?

A

The level of GDP where all available factor inputs are fully employed.

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10
Q

What is economic integration?

A

A process in which countries have become increasingly integrated and inter-dependent.

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11
Q

What is national income?

A

Income generated from resources owned by inhabitants and businesses of a country.

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12
Q

What is environmentally adjusted GDP?

A

A popular term for environmentally adjusted gross domestic product.

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13
Q

What is GDP?

A

Total monetary value of output, spending, and factor incomes generated within the geographical boundaries of a country in a given time period.

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14
Q

What is GNI per capita?

A

National income per head of population, used as a baseline measure of living standards.

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15
Q

How is living standards quantified?

A

In terms of literacy, life expectancy, and purchasing power as measured by real national income per capita (PPP adjusted).

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16
Q

What is infrastructure?

A

The transport links, communications networks, sewage systems, energy plants, and other facilities essential for the efficient functioning of a country and its economy.

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17
Q

What are lagging indicators?

A

Indicators which tend to follow economic cycles, e.g., unemployment.

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18
Q

What are leading indicators?

A

Indicators which predict future economic trends, e.g., consumer confidence.

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19
Q

What does overall economic performance measure?

A

Changes in output, investment, prices, jobs, trade, living standards, and the distribution of income.

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20
Q

What industries are included in manufacturing?

A

Production industries including mining, electricity, water & waste management, and oil & gas extraction.

21
Q

What is societal well-being?

A

Looking beyond what an economy produces to areas such as health, relationships, education, housing quality, finances, and the environment.

22
Q

What is total income in an economy?

A

The total income earned by all factors of production in an economy in a given time frame.

23
Q

What is nominal GDP?

A

Monetary value of all goods and services produced expressed at current prices (i.e., unadjusted for the effects of inflation).

24
Q

What is nominal income?

A

The level of income in a given time period which is unadjusted for the effects of inflation, also known as money income.

25
Q

What is GNI per capita?

A

Income per head of the population - a measure of average living standards.

26
Q

What is purchasing power?

A

The buying power of a unit of currency, which is inversely related to the rate of inflation.

27
Q

What is Purchasing Power Parity (PPP)?

A

An economic theory that compares different countries’ currencies through a ‘basket of goods’ approach.

28
Q

What is real income?

A

Income after taxes and welfare benefits, adjusted for the effects of inflation.

29
Q

What is real GDP?

A

Nominal GDP adjusted for price changes, expressed at constant prices.

30
Q

What is real income per head?

A

Real value of household income per head of population = real GDP divided by the resident population.

31
Q

What do service industries include?

A

The retail sector, financial sector, public sector, business administration, and cultural activities.

32
Q

What is the CPI?

A

The UK government’s preferred measure of inflation, measuring changes in the average cost of living for a representative household.

33
Q

What is cost-push inflation?

A

Inflation caused by rising costs of production either domestically or from importing raw materials at higher prices.

34
Q

What is CPIH?

A

A measure of UK inflation introduced in 2017 that includes owner occupiers’ housing costs.

35
Q

What is low inflation?

A

Small rises in the general price level over a long period, with a low positive rate of inflation.

36
Q

What is deflation?

A

A persistent fall in the general price level of goods and services shown by a negative rate of inflation.

37
Q

What causes demand-pull inflation?

A

An excess of aggregate demand over aggregate supply, often described as ‘too much money chasing too few goods.’

38
Q

What is disinflation?

A

A fall in the rate of inflation but not sufficient to bring about deflation.

39
Q

What is inflation?

A

A sustained increase in the general price level for goods and services.

40
Q

What are inflation expectations?

A

The rate of increase of consumer prices perceived by consumers, which can influence spending and saving decisions.

41
Q

What is the Bank of England’s inflation target?

A

The current CPI inflation target, which is 2 percent.

42
Q

What are inflationary pressures?

A

Demand and supply-side pressures that can cause a rise in the general price level.

43
Q

What is the money supply?

A

The entire quantity of a country’s commercial bills, coins, loans, and credit.

44
Q

What is price stability?

A

Occurs when there is a low positive inflation rate of between 1-3% and price changes have little impact on day-to-day decisions.

45
Q

Purchasing power

A

The buying power of a unit of currency. It is inversely related to the rate of
inflation.

46
Q

Relative deflation

A

economy with an inflation rate which is lower than comparable economies. Over time, a low relative rate of inflation can lead to improved price competitiveness.

47
Q

Stagflation

A

A combination of slow growth and rising inflation. The most notable recent period of stagflation occurred during the 1970s, when world oil prices rose dramatically, and UK inflation rose at one point to nearly 30 per cent.

48
Q

Wage price spiral

A

Where workers bid for higher wages because they have seen their real income eroded by rising prices. This can lead to a further burst of cost-push inflation.

49
Q

Weights

A

Weights are used when calculating a weighted consumer price index. In the UK for example, the weights used are taken from the spending patterns revealed by data from the Family Expenditure Survey. Heavily weighted items
such as transport costs, fuel bills and prices of foodstuffs have a bigger impact on the overall measure of CPI inflation.

Economics AL Flashcards (24 decks)

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