Economics Flashcards 0.0 / 5 ? EconomicsMarket failureGlobalisation and tradeUnemploymentResource allocationMacroeconomic indicatorsA2/A-levelEdexcel Created by: aylineCreated on: 14-03-18 18:20 Define Market Failure Occurs when price mechanism fails to allocate resources efficiently 1 of 20 Define Globalisation A process of deeper economic integration between counties 2 of 20 Define Trade Exchange of goods/services between countries 3 of 20 Examples of Macroeconomic Indicators RGDP, Unemployment Rate, Trade Balance, Productivity of labour, Average standard of living, etc. 4 of 20 What is Positive Externalities When goods/services are under-consumed or under-supplied. There is benefit on third-parties. 5 of 20 What is Negative Externalities When goods/services are over-consumed or over-supplied. There is cost on third-parties. 6 of 20 Causes of Unemployment Frictional unemployment, Structural unemployment, Cyclical unemployment, Voluntary unemployment. Increase in new Technology, Excess job places, etc. 7 of 20 Reasons of Market Failure 1. Information Failure, 2. Externalities, 3. Public Goods, 4.Inflation, 5. Excessive Regulation; 8 of 20 Define Merit Goods The goods the consumers would under-consume. Rival and Excludable. Provided by the public & private sector. 9 of 20 Define Public Goods Non-excludable, Non-rival goods, provided by the Government 10 of 20 Define Economic Growth The long-term expansion in the productive potential of an economy. 11 of 20 What is Unemployment Rate The percentage of the total unemployed which are in the process of finding a new job. Formula: Unemployed/ Labour force in the particular region *100 12 of 20 What is Frictional Unemployment When the unemployed is in the process of finding a new job in the free market. 13 of 20 What is Structural Unemployment When unemployed people cannot meet the required skills for available jobs. 14 of 20 What is Resource allocation Distribution of productive assets among different uses. 15 of 20 Define Absolute Advantage When a country can produce the same amount of goods as another country, but with fewer resources, therefore with lower costs. 16 of 20 Define Comparative Advantage When a country can produce a certain good/service at a lower opportunity cost than another country, which makes this good/service cheaper. 17 of 20 Define International Monetary Fund It is a institution, which reduces trade restrictions, wants stable exchange rates and corrects balance-of-payment problems. 18 of 20 Tariff A tax which is imposed on imports and exports between countries to restrict trade. 19 of 20 Problems with measuring GDP Prices are not constant, Household productions are not included, Double Counting Problem, Black Market, etc. 20 of 20
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