Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

economics paper 1 & 2 > Topic 3 > Flashcards

Topic 3 Flashcards

1
Q

Economic growth

A

Growth in GDP (value of output) over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Determinants of economic growth

A

Investment (spending on capital goods), changes in technology, education, labour productivity, size of the workforce, natural resources and government policies (i.e. infrastructure development)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Economic growth benefits

A

A rise in material lifestyles
A reduction in poverty (through tax revenue)
A rise in the welfare of the population
A rise in employment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Economic growth costs

A

Pollution (Air, land etc)
Carbon emissions
Congestion
Loss of non-renewable resources
Inflation
A lower quality of life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Employment

A

The use of labour in the economy to produce goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Claimant count

A

The method of measuring unemployment according to the number of people claiming unemployment related benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Level of unemployment

A

The number of people in the working population who are unemployed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Rate of unemployment

A

The % of the country’s workforce that is unemployed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Four types of unemployment

A

Seasonal - (changes in employment due to time of year)
Frictional - (unemployment when people move between jobs)
Structural - (Permanent decline of an industry)
Cyclical - (Fall in total demand in an economy)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Benefits of unemployment

A

Wage inflation kept down
Firms can be more competitive on price
Inflation kept under control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Individual consequences of unemployment

A

Loss of self-esteem
Lower living standards
Family issues
Become deskilled

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Government consequences of unemployment

A

Wasted labour resources
Paying out more in unemployment related benefits
Less tax revenue
Leads to further unemployment (cyclical)
Budget deficit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Regional consequences of unemployment

A

‘Depressed areas’
Falling house values
Crime

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Distribution of income

A

How incomes are shared out between households

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Distribution of wealth

A

How wealth shared out between households

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Income

A

A flow of money over times includes wages, rent, interest, profits (dividends) and benefits (incl. pensions)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Wealth

A

The combined value of a stock of assets at a particular point of time including property, land and money in the bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Causes of uneven income distribution

A

Income earning assets are unevenly distributed
Differences in wages
Reliance on benefits (includes pensions)
Age
Gender

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Causes of uneven wealth distribution

A

Inheritance
Savings
Purchase of property
Enterprise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Consequences of uneven income and wealth distribution

A

Poverty and deprivation (Distinguish between absolute and relative)
Poor housing
Poor health
Inequality of opportunity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Cost of living

A

The price level of goods and services bought by the average family

22
Q

Price stability

A

When the general level of prices stays constant, or grows at an acceptably low rate

23
Q

Nominal values

A

The value of something in money

24
Q

Real values

A

Pay adjusted for inflation (Shows purchasing power comparable to other years)

25
Q

CPI Key Points

A

Measured using index

Basket is weighted

26
Q

Consequences of inflation for consumers

A

Shoe leather costs
Loss of consumer confidence
Fall in real incomes

27
Q

Consequences of inflation for producers

A

More flexibility setting wages
Menu costs
Conflicts (i.e. with trade unions)
Less internationally competitive
Make workers redundant
Reduced business confidence (leading to less investment)

28
Q

Consequences of inflation for savers

A

Savings worth less (value falls)

29
Q

Consequences of inflation for the government

A

Policy needed to combat inflation
More spending on benefits and public sector wages (index linked)
More tax revenue (i.e. VAT)

30
Q

Government spending

A

The total amount of money spent by the government in a given period of time

31
Q

Government revenue

A

The source of finance for government spending

32
Q

Budget deficit/surplus - key point

A

The government might deliberately budget for a deficit/surplus to achieve objectives

33
Q

Macro economic objectives

A

Low unemployment
Economic growth
Price stability
Balance in the balance of payments

34
Q

Fiscal policy tools

A

Taxes

Government spending

35
Q

Costs of budget deficit

A

No guarantee workers will spend extra money - less money circulating
Extra income may be spent on imports - leads to budget deficit
Inflation could rise - from demand pull inflation
Opportunity costs

36
Q

Government action to redistribute income and wealth

A

Taxes
Benefits
Progressive taxes
Inheritance tax
Means tested benefits
Education spending

37
Q

Progressive tax

A

A tax which takes a greater % of tax the higher the income

38
Q

Evaluating consequences of measures to redistribute income and wealth

A

People may not work if post tax income is not much better than benefits
Workers may not seek promotion
Businesses may not/invest in the UK
High earners may move abroad

39
Q

Monetary policy

A

A policy that aims to control the total supply of money in the economy to try to achieve the government’s macro economic objectives - in particular, price stability

40
Q

Monetary policy tools

A

Interest rates

Quantitative easing

41
Q

Quantitative easing

A

The central bank makes more money available for High St banks to lend

42
Q

Other impacts of reduced interest rates

A

Fall in the value of the £
Exports cheaper, imports more expensive

Asset (i.e. houses) prices rise

43
Q

Supply side policies

A

Policies that increase the productive capability of the economy i.e. increase the output

44
Q

Supply side policies examples

A

Education and training
Subsidies
Spending on infrastructure
Reducing power of trade unions
Competition policies
Reduction in benefits
Reduction in direct taxes
Privatisation (encourages efficiency)

45
Q

Benefits of supply side policies

A

Targets specific markets
Combats inflation
Increases employment
Improves the balance of payments
Increases growth

46
Q

Evaluation of supply side policies

A

Times lags
Costly
Resistance i.e. trade unions
Affects distribution of income negatively
Unintended effects i.e. more part time workers

47
Q

Externality

A

An effect of an economic activity on a third party

48
Q

Government policies to impact externalities

A

Taxes
Subsidies
Information provision
State provision
Legislation

49
Q

State provision

A

Goods and services provided directly by the government i.e. education and healthcare

50
Q

Fiscal policy

A

The use of government spending and taxation to affect the economy as a whole.

economics paper 1 & 2 (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions