Tiger Flashcards
What is TIGER an acronym for?
Macroeconomic indicators
What does each letter in TIGER mean?
Trade
Inflation
Growth
Employment
Rest - eg. productivity
What is demand pull inflation?
When the price increases due to an increase in demand in an economy
What is cost push inflation?
When the price level increases due to an increase in the costs to businesses
Inflation definition?
A general increase in the prices of goods and services, and a fall in the purchasing value of money
What two ways is inflation measured?
CPI - CONSUMER PRICE INDEX
RPI - RETAIL PRICE INDEX
How does CPI work?
Each month, the ONS collects around 180,000 prices of 700 items and compare changes to previous month
What does PIMMFACED show us?
Problems of a free market
What is a free market?
Economic system based on supply and demand with little or no government control
Examples of a free market?
Restaurant owners can decide what types of foods they’ll offer, where they’ll run their business, and what they’ll charge for their meals
What does each letter stand for in PIMMFACED?
Public goods
Inequality
Monopoly
Merit goods
Factor immobility
Agriculture
Cyclical instability
Externalities
Demerit goods
Definition of public goods?
A public good is a good with the characteristics of non rivalry and non excludability
Examples of public goods?
Street lighting
National defence
What does non excludable mean when talking about public goods?
You cannot prevent someone from using it if they don’t pay.
What does non rivalry mean when talking about public goods?
One person’s use does not reduce availability for others
What does inequality mean when referring to PIMMFACED?
No social security net for those who are unemployed or on low income when in a free market
What is a merit good?
A good that is under-provided because people underestimate the benefits
Examples of merit goods
Education
Healthcare
Monopolies can develop easily in a free market. Why are they bad?
Owners are in a position to set high prices and exploit both consumers and workers
When does factor immobility occur?
When a factor of production cannot move easily from one region of an economy to another
Why is agriculture on PIMMFACED?
Because it is prone to failure and often requires help
What is cyclical instability?
Economic recessions which leads to corresponding unemployment
Why is externalities on PIMMFACED?
Because there would be an over-consumption of goods like tobacco with negative externalities
De-merit good definition?
Goods which are over-consumed because negative effects are underestimated
Example of de-merit goods?
Drugs
Alcohol
GDP per capita formula?
gross domestic product / midyear population
What does very silly fools suck their chips show?
Types of unemployment
What does Very stand for?
Vocational unemployment
What does silly stand for?
Seasonal unemployment
What does fools stand for?
Frictional unemployment
What does suck stand for?
Structural unemployment
What does their stand for?
Trade union/traditional unemployment
What does chips stand for?
Cyclical unemployment
frictional unemployment definition?
temporary unemployment caused by imperfect information where workers are unable to find work for their skill set - people looking for jobs
cyclical unemployment definition?
Unemployment caused by a lack of demand for goods and services
seasonal unemployment definition?
people are temporarily out of work due to the seasonal nature of certain industries
Structural unemployment definition?
long-lasting unemployment that comes about due to shifts in an economy
What is trade union unemployment?
occurs when trade unions negotiate for wages that are higher than what employers are willing or able to pay so companies may hire less workers
What is vocational unemployment?
Mismatch between the workers skills and the jobs available
What does the Claimant Count record?
record the number of people claiming unemployment-related benefits
What does the LFS estimate?
unemployment level and the unemployment rate on a monthly basis
Examples of costs of unemployment?
Lost output
Social costs
Less tax rev for gov
What is hysteresis?
UNEMPLOYMENT BECOMES LONG-TERM IN NATURE - THEY MAY LOSE SKILLS - BECOME UNEMPLOYABLE
Examples of benefits of unemployment?
Greater pool of workers for firms
Low inflation
Improved current account position
Workers have time to find suitable job
What is a budget deficit?
government spends more than revenue they receive
What is a budget surplus?
government revenue exceeds government spending
What is direct tax?
Taxes based on income such as income tax or national insurance
What is indirect tax?
Taxes on spending, examples of these would be excise duty and value added tax
Why is income tax a progressive tax?
Because tax rises as an individual’s annual salary rises
What is national insurance?
A contribution that qualifies towards certain benefits and state pension
What is corporation tax?
A tax your company or association pays to HM Revenue and Customs (HMRC) on profits in an ‘accounting period’
What is inheritance tax?
A tax on the estate (the property, money and possessions) of someone who’s died
Why is VAT a regressive tax?
Because it decreases depending on the price of a product
Who pays a higher share of their income in VAT, rich or poor person?
Poor
What is exercise duty?
Taxes imposed on the value of goods
Why is exercise duty a regressive tax?
Can fluctuate depending on price and how much consumed
