Theme 2 Flashcards
What is economic growth
Measures the rate GDP of a country changes over a year
Macroeconomic objectives
Reduce unemployment
Ecenomics growth
Control inflation
Promote sustainability
Manage debt
Increase productivity
Improve balance of payments
Redistribute income
Causes of economic growth
More business investment
Better productivity
Improves education and skills
Innovation
Better training of workers
New Technology
Nominal growth and real growth
Nominal: with inflation
Real growth : without inflation
Types of unemployment
Structural = skills not needed anymore
Cyclical = economic reasons
Frictional = personal short term unemployment
Seasonal = parts of the year there’s no work in your job
Causes of unemployment
Declined economic growth
Health
Increasing population
Unemployment consequences
Gov gas to spend more on benefits
Inequality increases
Ways of measuring unemployment
Claimant count =
only in the uk
18-66
Cheap
Easily understandable
Efficient
LFS ( labour force survey)
Europe
16-70
More accurate
Includes people who have found and job and people who have declined benefits
Tools of Fiscal Policy
Decrease/ increase gov spending and Taxation
Fiscal expansionary and Contractionary
Increase AD increase gov spending decrease taxation (expansionary)
Decrease AD decrease gov spending
Increase Taxation (contractionary )
Contractionary (tight ) fiscal
Debt better (less gov spending )
Less ecenomics growth
Increase unemployment
More sustainable
Exports may increase (inflation ) imports decrease
Balanced payments improved
Expansionary (loose )
Stimulate ecenomics growth
Exact opposite
Monetary policy involves
Changes in interest rates
Contractionary moneytary policy
Increased interest rates
Limit amount you can borrow
Less ecenomics growth Increase growth
Increased unemployment
Etc (same as fiscal )
Expansionary (stimulate economic growth )
Opposite
