Unemployment Inflation The Balance of Payments and Policies Flashcards
what is unemployment
people who are willing and able to work but are not employed
structural unemployment
this occurs when there is a long term decline for demand in an industry
demand deficient unemployment/ cyclical unemployment
this occurs when there is lack of demand for a good, this occurs during economical declines
what is the claimant count
counts the number of people who are unemployed and claiming unemployment related benefits
what is inflation
the rise of the average price level over time
what is CPI
this is weighted basket of goods and measures average change of price of the goods in the basket
- food
- transport
- housing
- medical care
what is RPI
a measure of inflation which measures the change in price of things such as mortgage and council tax also includes frequently bought goods(CPI)
what is demand pull inflation and examples
prices increase due to a rise in demand. low taxes, lower interest rates and low exchange rate(producers have to increase price)
what is cost push inflation
this when firms have to increase prices due to cost of production being more expensive. rise of raw materials, increased wages, low interest rates(imports more expensive)
monetary policy
the manipulation of interest rates , the money supply to influence the level of economic activity `(central bank)
what is quantitative easing
central bank prints money to purchase government bonds
this will encourage spending and borrowing in the economy
how to encourage expansionary monetary policy
low interest rates
how to encourage contractionary monetary policy
high interest rates
what is the current account
includes all the economic transactions between countries
the causes of imbalance of payments
strong currency(cheap imports)
economic growth(increase in consumer confidence)
deindustrialisation
what is austerity
when tax is increased to decrease a countries deficit
what is fiscal policy
the use of government spending, taxation and borrowing to affect AD, output and jobs
how can we achieve expansionary/ contractionary fiscal policy
cut taxation
increase tax
how can u cut budget deficit
interest should be raised and also taxation
how can training improve the output of a workforce
training will make sure that people are equipped with the right skills therefore productivity increases
