Inflation
A general increase in the prices of goods and services over time is called this.
Inflation
Economic growth is usually measured by changes in this indicator.
Gross Domestic Product (GDP)
Name the four components of the current account.
Balance on goods, services, income and current transfers
What is the current OCR in New Zealand?
2.5%
What country is New Zealand's largest trading partner?
China
When prices rise but at a slower rate, this term describes the trend.
Disinflation
What are two limitations of Real GDP as a measure of growth?
Does not show:
- What is being produced
- How income and wealth are distributed
- Impact on the environment
- Illegal or undeclared production
Fiscal policy involves changes to these two things.
Government spending and taxation
The government’s annual spending and revenue plan is known as this.
The Budget
New Zealand has a Free Trade Agreement with India. True or False?
False
This type of inflation is caused by rising production costs, such as wages or oil prices.
Cost-push inflation
1. Access to more resources (e.g. net migration gain)
2. Improvement in technology (e.g. AI)
If the OCR decreases, what will happen to each of the following: Consumption, Investment, Net Exports and the demand and supply for NZD and the Exchange Rate.
C - Increases
I - Increases
(X-M) - Increases
Demand for NZD decreases
Supply for NZD increases
Exchange Rate decreases
What is New Zealand's main export industry?
Dairy (agriculture)
What does a trade deficit indicate about a country’s imports and exports?
It imports more than it exports.
How could someone's nominal wage increase, but their real wage fall?
If the rate of inflation is greater than the increase in their nominal wage. For example, if their nominal wage increased by 2.5%, but the inflation rate is 3%. Their real wage will fall by 0.5%.
Name at least two flow-on effects from an increase in government spending.
- Increased production
- Increased demand for resources, more employment
- Increased household income and savings
- Increased tax paid to government
- Increased consumption spending
If New Zealand’s terms of trade increase, what does that mean for the economy?
Export prices rise relative to import prices.
Name one current economic challenge facing New Zealand in 2025.
Cost of living, housing affordability, labour shortages, stagnant economic growth.
How can currency depreciation impact inflation and exports in a country?
Exports become cheaper and more competitive, but imported goods become more expensive, increasing inflation.
Explain why it is better to be a borrower in times of high inflation than a saver.
Assets will increase in value. Value of dollars used to repay debt in the future will be lower. Real value of savings will fall. Savings have less purchasing power.
Name two negative effects of rapid economic growth on society or the environment.
Inflation, inequality, pollution, resource depletion etc.
What are the four main goals of macro economic policy.
Price stability, Economic growth, employment and balanced current account.
Who is the Governor of the Reserve Bank of New Zealand?
Dr. Anna Breman
Explain one short-term and one long-term impact of President Trump’s tariffs on the global economy.
Short term: Higher prices, economic volatility, uncertainty, trade war's
Long term:Slower global trade, conflict, loss of jobs