The Overall Level of Economic Activity

Question 1

Macroeconomics

Answer 1

Concerned with the national economy and how it allocates resources

Question 2

Economic growth (economic goal)

Answer 2

A steady rate in the increase of national income

Question 3

Employment (economic goal)

Answer 3

that result in a low level of unemployment

Question 4

Price Stability (economic goal)

Answer 4

A low and stable rate of inflation

Question 5

National debt (economic goal)

Answer 5

A sustainable level of national government debt

Question 6

GDP

Answer 6

Gross domestic product - the total value of all goods and services produced in en economy in a given time period

Question 7

GDP measures…

Answer 7

Total value of goods and services produced within a country over a given time period

Question 8

GNI/GNP measure…

Answer 8

Total value of goods and services produced by a nations citizens over a given time period, regardless of their location

Question 9

Formula for GNI

Answer 9

GDP + net property income from abroad (- income from foreign firms internationally/+ income generated by national firms internationally)

Question 10

Nominal figure

Answer 10

Amount of something that was measured in the year that the measurement occurred

Question 11

Real figure

Answer 11

A nominal figure that has been adjusted for prices to change

Question 12

Index number

Answer 12

Number that represents the price percentage change

Question 13

How to calculate real number

Answer 13

(normal/price index) x 100

Question 14

GDP formula

Answer 14

C+I+G+(X-M)

Question 15

Real GDP formula

Answer 15

nominal gdp / price index

Question 16

What is the purpose of collecting national income statistics? (4 reasons)

Answer 16

To see if economic policies are successful, to use as info to develop new policies, to evaluate if standards are living are improving, to use as a base for comparing countries

Question 17

Limitations of collected national income statistics (5 reasons)

Answer 17

Inaccuracies, unreported or underreported economic activities, externalities (external costs) and composition (whom for and what is prodcued)

Question 18

Key stages of a business cycle (4)

Answer 18

Recovery, boom, recession, trough

Question 19

Recession

Answer 19

Two consecutive quarters of negative economic growth

Question 20

Trough

Answer 20

When the economy stops contracting (decr GDP) before the economy begins to recover

Question 21

Boom

Answer 21

GDP is at potential maximum

Question 22

Recovery

Answer 22

GDP is increasing at an accelerating rate

Question 23

Three other ways to measure economic wellbeing of a nation

Answer 23

Better life index, happiness index, happy planet index

Question 24

Better life index

Answer 24

Measures wellbeing in areas of material living conditions and quality of life

Question 25

Happiness index

Answer 25

Measures GDP per capita

Question 26

Happy planet index

Answer 26

Measures how well countries are doing in achieving long and happy lives

Question 27

Happy planet index formula

Answer 27

(Wellbeing x life expectancy) / ecological footprint