What Is Macroeconomics? Flashcards
Macroeconomics definition
The study of the whole economy at the aggregate level
The main economic objectives are…
- Economic growth
- Low inflation rates
- Minimising unemployment
- Stable balance of payments (imports and exports)
Economic growth
The increase in the potential level of real output the economy can produce over a period of time
Short run economic growth
Growth of real output resulting from using idle resources (such as labour) which is taking up the slack in the economy.
Long run economic growth
An increase in the potential level of real output in the economy
4 factors of production
- Land (natural resource provided by nature)
- Labour (mental and physical capacity of workers to produce goods and services)
- Capital (machinery and equipment used to produce other goods)
- Enterprise
Inflation
A continuing or persistent rise in the average price level
Balanced budget
Is when government spending equals government revenue
What is the economic problem?
Providing for peoples wants and needs in a world of scarcity
Scarcity
The condition in which wants are forever greater than the available supply of goods, time and resources
What is economics?
The study of how society chooses to allocate its scarce resources in order to satisfy unlimited wants and needs.
Real GDP
Is a measure of all the goods and services produced in an economy adjusted for prices changes or inflation
GDP - gross domestic product
Measures the quantity of goods and services produced in an economy.
CPI - consumer price index
Official measure used to calculate the rate of consumer price inflation, using a basket of common goods
Unemployment
People of the working age, willing and able to work and actively seeking work but cannot find a job.
