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Economics > Theme 2 > Flashcards

Theme 2 Flashcards

1
Q

What are 4 factors that cause Economic Growth

A
  • Increased Productivity
  • Increased Consumer Spending
  • increased government Spending
  • increased investments
  • increased exports
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2
Q

What are 3 Benefits of Economic Growth

A
  • Greater Living Standards
  • Increased Levels Of income
  • Better education
  • Reduced Poverty
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3
Q

What are 2 Drawback of Economic Growth

A
  • Can lead to higher levels of Inflation
  • Inequality
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4
Q

What is Inflation

A

A rise in prices

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5
Q

What is deflation

A

A fall in prices

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6
Q

What is Disinflation

A

A rise in Prices but at a slower rate than before

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7
Q

What is a limitation of using CPI as a measure of inflation

A

-It can be outdated

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8
Q

What is the difference between CPI and RPI

A

CPI measure price changes RPI measures the inflation

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9
Q

What is Demand Pull Inflation

A

This is where increased levels of demand for a product cause the price to rise

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10
Q

What is Cost Push Inflation

A

Cost of production increases cause firms to increase their prices

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11
Q

What are the 3 causes of inflation

A
  • Demand Pull
  • Cosh Push
  • Growth of Money
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12
Q

What is the Claimant Count

A

It measures the number of people that are claiming Job Seekers Allowance

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13
Q

What is the Labour Force Survey

A

A survey that finds people who are out of work but willing to work

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14
Q

What is Structural Unemployment

A

Unemployment due to a mismatch of skills in an economy

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15
Q

What is Cyclical Unemployment

A

Unemployment due to the businsses cycle

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16
Q

What is Frictional Unemployment

A

People who are unemployed as they are looking for a new job

17
Q

What is Seasonal Unemployment

A

People are unemployed due to demand for the labour decreasing

18
Q

What are 2 benefits of being an Export Led economy

A
  • Economic Growth
  • Reduced current account deficit
19
Q

Define the Current Account

A

The record of payments for transactions between countries

20
Q

What can affect the level of Investment

A
  • Spare Capacity
  • Business Confidence
  • Availability of Credit
  • Government Regulations
  • Interest Rates
21
Q

What factors can affect SRAS

A
  • Raw Materials
  • Exchange Rates
  • Tax Rate
22
Q

What factors can affect LRAS

A
  • Technological Advances
  • Education
  • Migration
23
Q

What is Wealth

A

The value of assets

24
Q

What is income

A

The flow of money

25
Q

What is the equation for the Multiplier Effect

A

1 / 1 - MPC

26
Q

What is a Negative Output Gap

A

When actual grow is lower than potential growth

27
Q

What is a Positive Output Gap

A

When actual growth is higher than potential growth

28
Q

What are the 4 Characteristics of a Boom

A
  • Low Inflation
  • Low Unemployment
  • High Consumer Spending
  • High Living Standards
29
Q

What are 4 Characteristics of a Recession

A
  • High Inflation
  • High Unemployment
  • Low Consumer Spending
  • Lower Living Standards
30
Q

Define Monetary Policy

A

Manipulation of monetary variables in order to influence AD

31
Q

Define Fiscal Policy

A

Manipulation of Government Spending and Taxation in order to influence AD

32
Q

What is Quantitative Easing

A

The buying of government bonds by the central bank as a means of increasing money supply to stimulate growth

33
Q

What is the Base Rate

A

The rate that the central bank will charge commercial banks for loans

34
Q

What are 2 Benefits of Demand Side Policies

A
  • Can lead to a Multiplier Effect
  • If there is Spare Capacity the economy can grow quickly
35
Q

What are 2 Drawback of Demand Side Policies

A
  • Multiplier may have a small effect
  • If there is no spare capacity supply side policies are needed
  • Can create huge budget deficits
36
Q

What are 2 Benefits of Supply Side Policies

A
  • They can help increase production
  • Can help increase growth when spare capacity is limited
37
Q

What are 2 Drawbacks of Supply Side Policies

A
  • It can be very expensive
  • Takes a lot time before seeing the effects
38
Q

Define Investment

A

Money spent on purchasing capital goods improve factors of production

39
Q

Define Exchange Rate

A

The value of one currency compared to another

Economics (8 decks)

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