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23 Cards in this Set
- Front
- Back
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What is macroeconomics? |
The study of relationships between economic variables at an aggregate level. |
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What is a nominal value? |
A value of an economic variable based on current prices, taking no account of changing prices through time. |
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What is a real value? |
The value of an economic variable, taking into account of changing prices through time. |
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What is an index number? |
A device for comparing the price of a variable in one period or location with a base observation. |
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How does one calculate a percentage change? |
100x(new price-old price)/original price |
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How does one create an index number with an original and a new price? |
Original/New x 100 |
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What is GDP? |
- Gross domestic product. - The total value of all goods and services produced in an economy by the factor of production in a given period of time. |
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What is potential economic growth? |
An expansion of the potential productive capacity. |
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What is Gross National Income? |
GDP + Remittance |
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What is remittance? |
The transfer of money from a foreign citizen back to their home country. |
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What is Gross National Product? |
The value of all goods and services produced by the factors of production owned by an economy's citizen. |
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What are the factors of production?
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- Land - Labour - Capital - Entrepreneurship |
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What are returns on factors of production? |
- Rent - Wages - Interest - Profit |
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What are withdrawals in an economy? |
- Taxes - Saving - Imports |
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What are the injections in an economy? |
- Government spending - Investment - Exports |
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What are the limitations of GDP? |
- The hidden economy is ignored. - No non-market activity. - If GDP growth is lower than population growth than living standards will fall. - The composition of GDP is more important than the figure, e.g. if more capital goods are produced then short term living standards may fall but in the long term they will rise. |
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What is PPP? |
- Purchasing Power Parity - This is how much a certain amount of money can buy in one compared to another. |
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What is actual economic growth? |
Expansion in the national output of the factors of production. |
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What is inflation? |
A steady and continuous rise in average price levels. |
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What is CPI? |
Consumer Price Index, a measure of the general level of prices in the UK. |
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What is RPI? |
Retail Price Index, a measure of the general level of prices in the UK. |
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Which measure is the internationally recognised government used one? |
CPI |
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Which measure includes all families? |
CPI, RPI excludes he richest and the poorest. |
