theme 2-macro economics

• what is economic growth?


  measure of an increase in real gdp(inflation has been taken into account)
• what is gdp?


  the total amount of goods and services produced in a country in a year/total amount spent
• what is potential economic growth?

  measure of an increase in the productive capacity of an economy(outward curve)
• what is a reccesion?

  when an economy suffers two consecutive quarters of negative economic growth?
• real life examples of reccesion

  2008 global financial crisis, covid 19-unemplyoment, closure of firms
• what is nominal gdp?


  the money value of all goods and services produced by a country in 1 year
• what is real gdp?

  nominal gdp adjusted for inflation-measures changes in the volume output
• what is gdp per capita?

  calculated by dividing gdp by the country's population
• example of gdp per capita

  uk gdp per capita was $46,867 but in india it was $6670-gdp measures living standards and so population needs to be taken into account
• what is GNI?


  measures income received by a country both domestically GDP and via net incomes from overseas
• what is purchasing power parities?


  used to compare gdp in different countries taken into account the cost of a basket of goods that could be bought in each countries being compared
• what are the limitations of using GDP to compare living standards between countries


  difference in population, different in rates of inflation, methods of calculation and reliability, differences in income distribution, differences in exchange rate
• what is easterlin paradox?


  once income increases beyond the level, marginal gains in happiness falls
• what is inflation?


  inflation is a sustained rise in the general price level e.g iran+argentina had an inflation rate of 40%
• what is deflation?


  a sustained fall in the general price level e.g COVID-19 caused a severe reccesion
• what is disinflation?


  fall in the rate at which the general price level is rising
• example of disinflation


  in 2020 a fall in oil prices
• what is cpi?


  measure of inflation used for inflation targeting in the uk, make international comparisons of inflation rates
• what are the limitations of cpi?


  does not include housing costs, sampling issues, not representative-700 households
• what is retail price index?


  an alternative measure of inflation, includes housing costs, such as payments on mortgage interest and council tax.
• what are the effects of inflation?


  consumers- those on fixed incomes(incomes would fall in real terms), those with savings, loans, mortgages firms- fall in exports (uk's international competitiveness will decrease)uncertainty, lower profits, impact on monetary policy(increase in interest rates)
• what are the effects on inflation within the government and workers?


  government- fall in the real value of national debt, increased inequality, deterioration in the balance of trade- fall in international competitiveness exports decrease, imports increase-deficit
• what is the claimant count?


   a person who is receiving the Job Seekers’ Allowance.
• what is the UK labour force survey?


  survey of a sample of households- asked people between the ages of 16-65 if they have been out of work for 4 weeks and if they are ready to start within 2 weeks.
• what is the international labour organisation?


  methods of measuring unemployment allowing for international comparison
• what is unemployment?


  To be counted as unemployed,

  someone must be of working age,

  willing and able to work and actively

  seeking work but cannot find a job.
• what is the unemployment rate?


  the number of unemployed people as a percentage of the labour force
• what is the labour force?


  economically active population consists of those unemployed, those in paid or self-employment
• what is underemployment?


  Individuals who are seeking or available for additional work
• what does the office for national statistics measure?


  measures underemployment as all those workers who are willing to work more hours than they already do and are willing to start in 2 weeks
• what does OECD include in the definition of underemployment?


  People who are working in jobs where their skills are not adequately utilised-overqualified for the job
• what is the significance of an increase in the employment rate?


  Increased GDP, increased revenue/profit for firms, increased incomes, improved skills/human capital, higher government taxation revenue
• what is the significance a decrease in the unemployment rate?


  falling government spending, job market becoming less flexible, increased employment
• what is long term unemployment?


  people who have been unemployed for 12 months or more.
• what is meant by mass unemployment?


  when one person out of 10 is not in work-unemployed
• what is youth unemployment?


  measured unemployed rate-economic active population who are unemployed-16-24 year olds
• Who are discouraged workers?


  one group of inactive work-seekers-they believe they are not suitable for any job
• what is hidden unemployment?


  The number of people who do not have work but who are not counted in government reports
• what is gig economy?


   a work arrangement where people perform short-term, flexible, and often freelance work, typically through online platforms or apps
• examples of gig economy

  rideshare drivers, freelance writers, virtual assistants, and food delivery workers.