ECONOMIC GROWTH/INFLATION
Name at least two different macroeconomic objectives
Reducing unemployment/Protect the environment/Balance of payments/Economic growth/Controlling inflation/Redistribution of income
Name at least two types of unemployment
Seasonal/Voluntary/Structural/Cyclical/Frictional
Provide an example of visual pollution
What is fiscal policy?
Decisions about taxation, government spending and borrowing to control aggregate demand
Which two tools are used in monetary policy?
Interest rates, money supply
How can Economic growth be measured?
Using GDP or GDP per capita
What is included in the balance of payments?
All exports, imports, financial transfers and incomes
Name at least two government regulations to protect the environment
Taxation, fines, pollution permits etc.
What are direct taxes? Provide an example
Income taxes e.g. Inheritance tax
Define the term Interest rate
Price of borrowing money
What is happening in the economy during the Downturn phase?
Rising unemployment, slower economic growth
What is the difference between current account deficits and surpluses?
Deficits - imports>exports
Surpluses - exports>imports
What are pollution permits?
Documents that give businesses the right to discharge a certain amount of polluting material
What is the difference between fiscal deficits and fiscal surpluses?
Deficit - government expenditure > government revenue
Surpluses - government revenue > government expenditure
Describe two roles of central banks
Setting interest rates, implementing monetary policy, controlling inflation
The difference between demand-pull and cost-push inflation?
Demand-pull - too much demand
Cost-push - rising production costs
What is cyclical unemployment and during which economic phase it happens?
Caused by falling demand in the economy, happens during downturn
What is the difference between progressive and regressive taxation?
Progressive - tax burden on those who earn more
Regressive - tax burden on poor
What is the difference between contractionary and expansionary fiscal policy?
Contractionary - reduces aggregate demand
Expansionary - increases aggregate demand
What is base rate and money supply?
Base rate - interest rate set by central bank
Money supply - amount of money circulating in the economy
What are menu costs?
Costs to firms of having to make repeated price changes
What is the difference between primary and secondary income?
Primary - loan of production factors abroad
Secondary - government transfers to and from overseas
What is the graphical representation of income inequality in the economy? Plot the graph.
Lorenz curve
Explain three types of taxes and provide example.
Direct - income tax, e.g. corporation tax
Indirect - tax on expenditure, e.g. VAT
Environmental - protects the environment, e.g. landfill tax
What is quantitative easing?
Buying financial assets, so that money flows from central bank to commercial banks