Macro

• What are the 5 main macro goals represented by GIUCL?

  Economic growth, low inflation, low unemployment, satisfactory current account, high living standards
• What are some other macro goals besides GIUCL?

  Low government borrowing, stable exchange rate, equality, environment
• What may high rates of economic growth lead to?

  Inflation, current account deficits, and environmental issues
• What are the consequences of reducing inflation?

  Lower economic growth and unemployment
• What is real GDP?

  Total value of final goods and services, adjusted for inflation
• What are the three macroeconomic indicators?

  Real GDP, Economic growth, unemployment
• How often is GDP measured?

  Quarterly
• What is classed as a recession?

  When GDP suffers two consecutive quarter falls
• What is economic growth?

  Increase in real GDP caused by increased AD or LRAS
• What is full employment considered as?

  3% or less are unemployed
• What is full employment also considered as?

  Workers willing and able to work equals jobs available
• What are the advantages of using GDP as a performance indicator?

  • Governments use it to implement economic policy
  • It helps forecast economic trends
  • It benchmarks living standards
• What are the disadvantages of using GDP as a performance indicator?

  • Requires extensive data collection
  • Excludes informal economy activities
  • Risks double counting
  • Only provides a single measure of living standards
• What are the advantages of economic growth?

  • Incomes rise
  • Increased profits for firms
  • Fiscal dividends for government
• What are the disadvantages of economic growth?

  • Demand-pull inflation may occur
  • Not all benefit from income rise
  • Rising incomes are just one aspect of living standards
  • Current account deficit may grow
• What is unemployment?

  Working age individuals seeking jobs but cannot find one
• What is the claimant count?

  Measures unemployment from those claiming benefits
• What is the labour force survey?

  A quarterly sample for collecting labour market data
• What is one advantage of the labour force survey?

  It allows for detailed analysis of the labour market
• What are the disadvantages of the labour force survey?

  Hidden employed, underemployed, disparities, costs
• What is underemployment?

  Working without fully utilizing skills or insufficient hours
• What are the types of unemployment?

  • Cyclical
  • Structural
  • Real wage
  • Frictional
  • Seasonal
• What is cyclical unemployment?

  Caused by a lack of AD, usually during a recession
• What is structural unemployment?

  Immobility of labor due to long-term industry changes
• What is real wage unemployment?

  When real wages exceed equilibrium, causing excess supply
• What is frictional unemployment?

  Voluntary unemployment while transitioning between jobs
• What is seasonal unemployment?

  Regular changes in employment due to seasonal factors
• What is hysteresis?

  An event persisting after its causing factors are removed
• What does immobility mean?

  Resources cannot easily move to where needed
• What is occupational immobility?

  Workers struggle to transition into different industries
• What is geographical immobility?

  Workers cannot move locations due to family ties
• What does immobility lead to?

  Structural unemployment, unused resources, lower wages
• What is deficient aggregate demand a cause of?

  Mass unemployment
• What is a negative output gap linked to?

  Cyclical unemployment
• What are the solutions to cyclical unemployment?

  • Expansionary monetary policy (buy bonds)
• What is the solution to structural unemployment?

  • Supply side policy (education)
• What are the solutions to real wage unemployment?

  • Decrease minimum wage
• What is the solution to frictional unemployment?

  • Better websites for jobseekers
• What is the solution to seasonal unemployment?

  • Diversify the economy
• What should be considered when tackling unemployment?

  Duration, type, and severity of unemployment