Theme 2 Continued Flashcards
Economic growth definition
The rate gross domestic product (GDP) of a country changes over a year. Measures changes in output.
Trend growth definition
The estimated rate of growth of a nations productive potential
Nominal growth definition
Growth with inflation
Real growth
Growth without inflation
Advantages of economic growth
- more tax revenue
- less unemployment
- more entrepreneurship
- higher standards of living
Disadvantages of economic growth
- less sustainability
- greater stress on workers
- ignores the black market
Frictional unemployment
Out of work due to personal short term unemployment
Structural unemployment
Skills are no longer relevant
Cyclical unemployment
Economic reasons
Seasonal unemployment
Parts of the year when there is no work in your job
Balance of payments definition
Measures all international economic transactions between the uk and it’s trading partners
Capital account definition (positive value)
Purchase and sale of fixed assets such as real estate
Current account definition (a negative value)
- net exports (imports and exports)
- net income (investment from overseas)
- net transfers (sums sent home to migrant families)
Financial account definition (always a positive value)
- FDI (building factories)
- net portfolio investment (savings and bonds)
- other financial items (hot money)
Inflation
General price rises
Disinflation
Prices rising, not as much as previously
Deflation
General price falls
Demand pull
Consumers spend and prices rise to outbid each other
Cost push
Suppliers see increase in cost and pass onto consumers
Interventionist policies
The government takes part
Market based policies
When it becomes easier for the market to work efficiently
Examples of interventionist Supplyside policies
- spending on healthcare
- building business parks
- increased education and training
- improving transport and infrastructure
- invest in social (council) housing
Market based Supplyside polices
- reducing trade union power
- privatisation of state industry
- lower tariff barriers
- removing unnecessary red tape
- reduce corporation tax
- reducing state welfare benefits
- providing better information about jobs
- deregulation of industry
- flexible labour markets
Trade unions
An organised association of workers in a profession. Seeks to protect workers pay and rights.
Privatisation
Selling a state industry to the private sector
Deregulation
The opening up of a state monopoly. This market is now open to competotion
The principle agent
When there is a conflict in priorities between the owner of an asset and the person to whom control of the asset has been delegated.
