Kangaroo
How do we measure economic growth?
GDP
The PPF is one of our economic models. What does PPF stand for?
Production possibilities frontier
How many quarters are there in a year?
4
Can we achieve an unemployment rate of 0%?
No
What does G stand for in the formula for GDP?
Government spending
What does C stand for in the GDP formula?
Consumption
What is the difference between durable consumption and non-durable consumption?
Durable goods last for 3 years or more
What are the three key macroeconomic indicators?
Inflation/price stability, unemployment/full employment, economic growth
A recession occurs when ...
there are two quarters of negative economic growth
How do we measure inflation?
CPI - consumer price index
What is the target range for economic growth?
3-4% per annum
Interest rates impact which two components of aggregate expenditure?
Consumption and investment
Define full employment
Occurs when everyone who is willing to work can find employment.
What is the target rate for inflation?
2-3%
The level of disposable income (Yd) is a key factor affecting which component of aggregate expenditure?
Consumption
What is the formula for calculating GDP?
GDP = C + I + G + (X - M)
What are the 2 types of government spending?
Capital expenditure and current expenditure
Which key economic indicator has been difficult for developed economies to manage in the post-COVID era?
Inflation
Define economic growth
Economic Growth is defined as an increase in the real output of goods and services produced in a country.
Real GDP is adjusted to remove the effect of which economic indicator
Inflation
List three factors that influence net exports.
Dom business cycle
Overseas business cycle
Exchange rates
Terms of trade
Commodity prices
What are two things that happen if economic growth is too slow?
•It will be hard to achieve full employment.
•Wages will reduce.
•Lower spending.
•Lower living standards.
Given an example of a non-durable good
Any good that typically lasts for less than three years
What are two things that happen if economic growth is too rapid?
Too Rapid – Above 3-4%
•Too much pressure on price level due to high demand and economy unable to keep up with production.
•Inflation increases.
•High rates of growth also make it difficult to ensure the sustainability of scarce resources.
Identify the three injections in the full five sector circular flow model
Investment, government spending, exports