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Economics Edexcel > Theme 2 > Flashcards

Theme 2 Flashcards

1
Q

Capital Labour Substitution

A

Replacing workers with machines to increase productivity and reduce the unit cost of production.

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2
Q

Cyclical Unemployment

A

Unemployment caused by a persistent lack of aggregate demand for goods and services.

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3
Q

Discouraged Workers

A

People out of work for a long time who may give up on job search and effectively leave the labour market

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4
Q

Frictional Unemployment

A

Caused by workers seeking a better job or who are in-between jobs, or new entrants to the labour market.

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5
Q

Full-employment

A

When there are enough job vacancies for all the unemployed to take work.

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6
Q

Geographical Immobility

A

Difficulty in moving regions / areas to get a job

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7
Q

Hysteresis

A

When a sustained period of low aggregate demand can lead to a permanent reduction in the active labour supply.

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8
Q

Involuntary Unemployment

A

A situation where a worker is willing to rate at the going wage rate but cannot find a job.

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9
Q

Labour Force

A

All people who are of working age and able and willing to work. Includes both the employed and unemployed.

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10
Q

Long-term Jobless

A

People who have been unemployed for at least 1 year.

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11
Q

NAIRU

A

The rate of unemployment consistent with stable inflation.

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12
Q

Occupational Immobility

A

Difficulties in learning new skills applicable to a new industry, and technological change.

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13
Q

Participation Rate

A

Percentage (%) of the population of working age declaring themselves to be in the Labour Force.

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14
Q

Phillips Curve

A

Shows a possible trade-off between inflation and unemployment.

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15
Q

Real wage unemployment

A

Theory that wages above the market clearing equilibrium may cause unemployment.

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16
Q

Structural Unemployment

A

Unemployment resulting from the decline in an industry which leaves people unemployed as they do not have the skills to move into another industry.

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17
Q

Under-Employment

A

When people want to work full time but find that they can only get part-time work.

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18
Q

Unemployment Rate

A

Proportion of the economically active population who are unemployed.

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19
Q

Unemployment Trap

A

When the prospect of the loss of unemployment benefits dissuades those without work from taking a new job.

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20
Q

Zero Hours Contracts

A

Jobs that do not guarantee a minimum number of working hours each week.

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21
Q

List 4 SHORT Term Factors Of Economic Growth

A
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22
Q

List 4 LONG Term Factors Of Economic Growth

A
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23
Q

List 5 NEGATIVES Of Increasing GDP

A
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24
Q

List 5 POSITIVES Of Increasing GDP

A
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25
Q

Nominal GDP

A

The value of all goods and services produced in an economy in a year (not adjusted for inflation)

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26
Q

Real GDP

A

The value of all goods and services produced in an economy in a year (not adjusted for inflation)

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27
Q

What Is The Difference Between Real And Nominal GDP

A

Real GDP I sGDP adjusted for inflation, whereas Nominal GDP takes figures at face value.

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28
Q

What Is GNI

A
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29
Q

How Is GNI Measured

A
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30
Q

How Is GDP Measured

A
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31
Q

What Is The Informal Economy

A
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32
Q

List 5 Problems With Using GDP To Measure Living Standards

A
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33
Q

Economic Welfare

A
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34
Q

What Is The Easterlin Paradox

A
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35
Q

Deflation

A
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36
Q

Disinflation

A
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37
Q

Inflation

A
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38
Q

How Is Inflation Calculated In The UK Using CPI

A
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39
Q

Why Do Prices Rise/Fall

A
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40
Q

Demand Pull Inflation

A
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41
Q

Cost Push Inflation

A
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42
Q

Administered Prices

A
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43
Q

Give 4 Examples Of Demand Pull Inflation

A
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44
Q

Give 4 Examples Of Cost Push Inflation

A
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45
Q

Give 4 Examples Of Administered Prices

A
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46
Q

What Is An Internal Cause Of Inflation

A
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47
Q

What Is An External Cause Of Inflation

A
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48
Q

List 4 Internal Causes Of Inflation

A
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49
Q

List 4 External Causes Of Inflation

A
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50
Q

What Might Cause A Large Surge In Property Prices

A
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51
Q

Why Is Inflation A Bad Thing?

A
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52
Q

Who Benefits From High Inflation

A
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53
Q

Who Loses From High Inflation

A
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54
Q

List The 4 Types Of Unemployment

A
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55
Q

How Does Seasonal Unemployment Occur

A
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56
Q

How Does Structural Unemployment Occur

A
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57
Q

How Does Frictional Unemployment Occur

A
58
Q

How Does Cyclical Unemployment Occur

A
59
Q

What Are The Economic Costs Of High Unemployment

A
60
Q

List A Beneficiary Of High Unemployment

A
61
Q

List 3 Policies To Reduce Unemployment And INCREASE LABOUR DEMAND

A
62
Q

List 3 Policies To Reduce Unemployment And Increase Labour Supply

A
63
Q

List 3 Macro Stimulus Policies (Multiplier Effects)

A
64
Q

List 3 Ways To Cut The Costs Of Employing Workers

A
65
Q

List 3 Types Of Competitiveness Policies

A
66
Q

List 3 Ways To Reduce Occupational Mobility

A
67
Q

List 2 Ways To Improve Geographical Mobility

A
68
Q

List 3 Ways To Stimulate Stronger Work Incentives

A
69
Q

What Does S.P.I.C.E.D Stand For

A
70
Q

In The UK What Are The Key Barriers To Reducing Unemployment

A
71
Q

What Are 3 Disincentives Which Might Discourage People From Joining The Work Force

A
72
Q

Aggregate Demand

A
73
Q

Consumption

A
74
Q

Investment

A
75
Q

Aggregate

A
76
Q

Domestic Economy

A
77
Q

What Does An Aggregate Demand Curve Show?

A
78
Q

Average Propensity To Consume

A
79
Q

Average Propensity To Save

A
80
Q

Propensity

A
81
Q

Consumption Function

A
82
Q

Disposable Income

A
83
Q

Durable Goods

A
84
Q

Marginal Propensity To Consume

A
85
Q

Marginal Propensity To Save

A
86
Q

Non-durable Goods

A
87
Q

Savings Function

A
88
Q

Saving (Personal)

A
89
Q

Wealth Effect

A
90
Q

Accelerator Coefficient

A
91
Q

Accelerator Theory

A
92
Q

Animal Spirits

A
93
Q

Depreciation (Of The Capital Stock) Or Capital Consumption

A
94
Q

Capital-output Ratio

A
95
Q

Gross Investment

A
96
Q

Net Investment

A
97
Q

Retained Profit

A
98
Q

Net Exports Or The Net Trade Balance

A
99
Q

Aggregate Supply Curve

A
100
Q

Full Capacity

A
101
Q

Long-run Aggregate Supply Curve

A
102
Q

Short-run Aggregate Supply Curve

A
103
Q

Supply-side Shocks

A
104
Q

Circular Flow Of Income

A
105
Q

List 3 Features Of The Circular Flow Of Income

A
106
Q

Closed Economy

A
107
Q

Income

A
108
Q

Injections

A
109
Q

National Income

A
110
Q

Open Economy

A
111
Q

Wealth

A
112
Q

Withdrawals Or Leakages

A
113
Q

Marginal Propensity To Import (MPM)

A
114
Q

Multiplier Effect/Process

A
115
Q

Indicator

A

Signs of how an economy is performing.

116
Q

List 4 Indicators

A

Growth
Unemployment
Inflation
Trade

117
Q

What Is The Government Objective For Trade

A

Balanced - Similar Level Of Imports As Exports

118
Q

What Is The Government Objective For Inflation

A

Low And Stable 2%, (+-1%)

119
Q

What Is The Government Objective For Unemployment

A

Low Unemployment, Full Employment

120
Q

What Is The Government Objective For Growth

A

Strong, Sustained And Sustainable

121
Q

Stability

A

The Key Objectives being met consistently and at the same time.

122
Q

List 4 Core Objectives

A

Strong, sustained and sustainable growth
Low Unemployment
Low and stable inflation
Balanced Trade

123
Q

List 3 Examples Of Non-Core Government Objectives In The UK

A

Environmental Sustainability
Productivity Growth

124
Q

What Is An Injection In The Circular Flow Of Income

A

Money put into the economy that does not come from households.

125
Q

Give 3 Examples Of Injections In The Circular Flow Of Income

A

Investment
Government Spending
Exports (Foreigners Spending)

126
Q

What Is A Leakage In The Circular Flow Of Income

A

Money leaving the economy

127
Q

Give 3 Examples Of Leakage In The Circular Flow Of Income

A

Savings
Taxation
Imports (Money spent abroad)

128
Q

If Injections Are Equal To Leakages What Will Happen To The Economy

A

Balance, Macro-Economic Equilibrium

129
Q

If Injections Are Greater Than Leakages What Will Happen To The Economy

A

More money will enter the economy than exit, resulting in economic growth

130
Q

If Injections Are Less Than Leakages What Will Happen To The Economy

A

More money is leaving the economy than entering, resulting in decreasing economic growth.

131
Q

Macro-Economic Equilibrium

A

Injections And Leakages are equal in an economy

132
Q

In the Circular Flow Of Income, what are the 2 main parties.

A

HOUSEHOLDS
FIRMS

133
Q

What 2 things do households provide firms

A

Factors Of Production
Consumer Expenditure

134
Q

What 2 things do firms provide households

A

Goods And Services
Factor Incomes (Work)

135
Q

What are the 3 ways of measuring GDP

A

Output Method
Income Method
Expenditure Method

136
Q

Output Method For GDP

A

Measuring the total value of all GOODS AND SERVICES in an economy

137
Q

Income Method For GDP

A

Adding up the total value of all the

138
Q

Expenditure Method For GDP

A

The total expenditure, consumer expenditure + investment + government spending + net exports (exports - imports) in an economy

139
Q

What are the 4 things which can contribute to factor incomes

A

Wages and salaries
Interest
Profit
Rent Paid to a person

140
Q

In the circular flow of income is output, income and expenditure equal to each other?

A

Yes they are, all 3 ways of measuring GDP will result in the same answer.

141
Q

Output=?=?

A

Output=Income=Expenditure

142
Q
A

Economics Edexcel (4 decks)

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