OCR Economics: National and International Economy notes

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  • Created on: 13-05-13 17:45
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Key Definitions Macroeconomic Objectives Inflation Measuring Inflation
Aggregate Demand - The total demand for a - Economic Growth · Causes · CPI (Consumer Price Index)
country's goods and services at a given price - Low stable Inflation Demand Pull - An increase in price level
level at a given time period - Balanced Budget caused by an increase in Aggregate · RPI (Retail Price Index)
AD = C + I + G + (X-M) - Low unemployment Demand
- Equilibrium in balance of payments Cost Push - Increases in price level caused
Aggregate Supply - The total amount that Measuring Unemployment
- Good income distribution by increases in production costs
producers in an economy are willing and able Unemployment rate =
to supply at a given price level at a given time · Costs
(The unemployed/ Labour force) x100%
period Circular Flow of Income Fall in the value of currency
Injections Menu costs
Claimant Count - A measure of
Economic Growth - In the short run an - Investment Shoe-leather costs
unemployment that includes those
increase in real GDP/Output, In the long run an - Exports Inflationary noise
increase in productive capacity. receiving unemployment related benefits
- Government spending Random redistribution of Income
Leakages Fiscal drag
Unemployment - A situation where people are Labour Force Survey (LFS) - A measure
- Saving Uncertainty
out of work but willing and able to work of unemployment based on a survey using
- Imports Inflation causing Inflation
ILO definition of unemployment
Inflation - A sustained rise in price level over a - Taxes
period of time normally a year Unemployment International Labour Organisation (ILO)
Exchange Rate ·Causes definition of unemployment - `Out of
Balance of Payments - A record of how much The supply demand Cyclical - Lack of AD work, want a job, have actively sought
money is flowing in and out of a country Structural - Decline in a specific Industry
equilibrium is used work in the last 4 weeks and are available
Frictional - Unemployment between jobs to start work in the next two weeks or are
Income redistribution - How income is shared
Regional - localized unemployment out of work, have found a job and are
out between households
Seasonal - Unemployed due to seasonal waiting to start it in the next 2 weeks'
Economic stability - An economy with without jobs
major turbulence such as booms and ·Costs Measuring Economics growth
recessions Lost output
Types of Policy Nominal GDP - Out put measured in
Lost tax revenue
GDP - The total out put of goods and services Fiscal Policy - Used to effect Government current prices and so not adjusted for
Government spending on benefits
produced in an economy spending in order to increase or decrease inflation
Social costs i.e family issues
AD. This is to combat Inflation and Real GDP - Nominal GDP adjusted for
Real GDP - A measurement of a country's employment levels (Automatic stabilisers inflation
output and is adjusted for inflation
also used; Progressive taxation and Protectionism is used to restrict the free
Benefits) Current Account
Fiscal Policy - Policies introduced by a movement of goods between country's
government that effect government taxation · Components
and spending
Monetary Policy - Also used to effect AD Trade in Goods - Difference between
by influencing consumer expenditure and · Types of Protectionism
Tariffs - taxes on imports Exports and Imports of physical products
Monetary Policy - Policies introduced by a Investment, It may also effect AS in the Trade in Services - Difference between
government and/or a central bank that effect process Exports and imports of intangible products
the interest rate and supply of the currency Quotas - limit on amount of imports allowed
Income - Money brought into an economy
Supply sided Policy - Used to increase into a country
by a person or firm from money earned on
Supply sided Policy - A deliberate AS never to reduce it a foreign investment
manipulation of the productive capacity of an · types include - Education and training Voluntary Export restraints - Agreements
Transfers - when a certain foreign
economy in order to achieve the between country's about the amount of
Reduction in direct and corporation taxes country simply provides currency to
macroeconomics objectives exports they sell to each other
Reductions in benefits another country with nothing received as
Privatisation a return.
Deregulation Embargoes - A complete ban of imports


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