The objectives of government economic policy Flashcards
What is policy objective
a target or goal that policy-makers aim to ‘hit’
What are some examples of policy objectives (4)
-achieve economic growth
-improve living standards
-maintain full employment or low
-limt/control inflation
-attain a satisfactory balance of payments
What is short-run economic growth
occurs when there are unemployed resources or there is a movement from a point inside ppf to a point on the ppf
What is another word for short run growth
economic recovery
What is long run economic growth
resulting from an outward shift of the ppf
What is GDP
the sum of all goods and services, or level of output, produced in the economy over a period of time eg 1 year
What is real GDP
a measure of all the goods and services produced in an economy, adjusted for price changes or inflation.
What is nominal GDP
GDP measured at the current market prices, without removing the effects of inflation
What is a recession
defined as 6 months or more of negative economic growth or declining in real national output
What is full employment according to beveridge
means 3% or less of the labour forces is unemployed
What is the second definition of employment
occurs when the number of workers willing to work equals the number of workers whom employers wish to hire
What are the two methods used to measure unemployment in the UK
-claimant count
-labour force surver
What is inflation
a persistent or continuing rise in the average price level
What is deflation
a continuing tendency for the average price level to fall
What is disinflation
when the rate of inflation is falling, but still positive
What is price index
an index number showing the extent to which a price has changed in comparison with the prices in a base year
What is consumer prices index
the official measure used to calculate the rate of consumer price inflation in the UK.
What is retail prices index
a measure formerly used to calculate the rate of consumer price inflation in the UK
What is indexation
the automatic adjustment of items such a pensions and welfare benefits to changes in the price level.
What is the formula for rate of increase of real GDP
rate of increase of nominal GDP - rate of price inflation
What is balance of payments
a record of all the currency flows into and out of a country in a particular time period
What is a current account
measure all the current flows into and out of country in a particular time period
What are exports
they are domestically produced goods or services
