Macro 1.1–1.2
What does GDP stand for?
Gross Domestic Product.
What is an externality?
A cost or benefit to a third party not involved in the transaction.
What is organic growth?
Growth from within a business using retained profits or new investment.
What are the four main macroeconomic objectives?
Stable Growth,
low inflation,
low unemployment,
balance of payments stability.
What is the UK’s current inflation rate (as of 2025)?
4.1% (ONS, AUG 2025)
Define nominal GDP.
GDP measured at current prices, unadjusted for inflation.
What is a public good?
and give an example
A good that is non-rival and non-excludable.
Define vertical integration.
When two firms at different stages of production merge.
What is the equation for the multiplier?
1 ÷ (1 – MPC) or 1 ÷ MPW.
Which country experienced inflation above 200% in 2023?
Argentina / Zimbabwe / Venezuela
What is the equation for real GDP growth?
((New GDP – Old GDP) ÷ Old GDP )× 100.
What does MSB = MPB + external benefit represent?
Marginal social benefit equation.
What is the difference between allocative and productive efficiency?
Allocative efficiency is utilizing resources efficiently in order to maximizes overall societal welfare or utility
Productive efficiency is when a firm is minimizing wastage of resources, operating at lowest average cost
What does the Phillips Curve show?
The inverse relationship between inflation and unemployment.
Which company saw a 178.5% growth in market share, in 2024 to make them the largest company by marketcap?
Nvidia - £2.673 T
What is the difference between GNI and GDP?
GNI includes income from abroad; GDP does not.
Give one government policy to reduce negative externalities from production.
Indirect taxes, regulation, or tradable permits.
Why might a firm choose to satisfice rather than maximise profit?
Due to differing objectives between managers and shareholders. Principle agent problem. Social welfare maximisation.
What type of policy involves changing government spending and taxation?
Fiscal policy.
Which nation was first targeted by US tariffs under Trump’s 2018 trade policy?
China.
Give one limitation of using GDP as a measure of living standards.
Doesn’t account for inequality, informal economy, or non-monetary factors (e.g. happiness).
Explain why information failure can lead to market failure.
Consumers or producers make inefficient decisions due to lack of accurate information.
Give one reason for conglomerate integration.
Risk diversification or entering new markets.
Explain one reason why a current account deficit may occur.
High imports due to strong domestic demand or uncompetitive exports.
What year did Paypal and Ebay merger and demerger. And at what price did Ebay initial aquire them for?
$1.5Billion -2002
2015 Split