Theme 2 - The UK economy - performance and policies

what is Gross Domestic Product (GDP)?

explain the difference between real and nominal GDP

explain the difference between total and per capita GDP

explain the difference between GNP and GNI

3 limitations of using GDP to measure living standards

what is meant by ‘purchasing power parity’?

why is PPP useful

how is the ONS National Wellbeing indicator measured

explain the link between income and subjective happiness

define inflation

define deflation

define disinflation

what is an index number used for?

what does base year represent and what number is associated with the base year?

how do you calculate an index number?

how do you convert between nominal and real values?

what does CPI stand for?

explain how CPI is calculated

3 limitations of CPI as a measure of inflation

explain the difference between CPI and RPI

what is meant by cost push inflation

3 possible causes of cost push inflation

what is meant by demand pull inflation

3 possible causes of cost push inflation

what is meant by ‘menu costs’?

what is meant by ‘shoe leather costs’?

explain the effects of inflation on consumer

explain the effects of inflation on workers

explain the effects of inflation on firms

explain the effects of inflation on the gov

what is meant by ‘wage-price spiral’

define unemployment

what is the claimant count?

one advantage and disadvantage of the claimant count to calculate unemployment

What is the ILO measure of Unemployment and how is it calculated (Labour Force Survey)?

one advantage and one disadvantage of the ILO as a method to calculate unemployment

which methods of measuring unemployment is typically higher and why?

What is meant by employment?

What is meant by economically inactive?

What is meant by underemployed?

What is the difference between the population of a country and its labour force?

how do you calculate employment rate

how do you calculate unemployment rate

how do you calculate labour force

how do you calculate participation rate

What is ‘structural unemployment’?

What is ‘frictional unemployment’?

What is ‘seasonal unemployment’?

What is ‘demand deficient’ or ‘cyclical unemployment’?

What is ‘real wage inflexibility’?

how does unemployment affect individuals

how does unemployment affect firms

how does unemployment affcet gov

how does unemployment affect society

one possible benefit of Increasing Unemployment

What is meant by Net Inward Migration?

 likely effects of Net Inward Migration on an Economy

likely effects of Net Outward Migration on an Economy

What is the Balance of Payments?

what are the four components of the Current Account?

What is meant by a Current Account Surplus?

What is meant by a Current Account Deficit?

four factors that might lead to a Current Account Deficit or Surplus

When would a Current Account Deficit be considered a problem?

how might a current account deficit affect unemployment

how might a currecnt account deficit affect inflation

How might economic growth affect a Current Account Deficit?

Why can't all countries have a Current Account Surplus?

What is Aggregate Demand?

What are the four components of Aggregate Demand

What percentage of AD is comprised of each component

3 reasons why the AD curve is downward sloping

Define Consumption

Define Disposable Income

Explain the relationship between Disposable Income and Consumption

Explain the relationship between Savings and Consumption

What is Consumer Confidence and how does it affect Consumption

What is Consumer Confidence and how does it affect Consumption

explain how interest rates affect the level of consumption in a economy

explain how availability of credit affects the level of consumption in an economy

explain how the wealth effect affects the level of consumption in an economy

wealth effect definition

explain how the level of taxation affects the level of consumption in an economy

explain how the composition of households affects the level of consumption in an economy

Define Investment

Explain the difference between net investment and gross investment

two ways in which Investment may be funded

Explain the relationship between Economic Growth and Investment

explain how interest rates affect the level of consumption in an economy

explain how the availability of credit affects the level of consumption in an economy

explain how business confidence/animal spirits affacts the level of consumption in an economy

explain how the expected demand affects the level of consumption in an economy

explain how expected profits affects the level of consumption in an economy

what is meant by Government Expenditure

what is meant by capital expenditure (gov spending)

what is meant by current expenditure (gov spending)

explain what is meant by transfer payments (gov expenditure)

Explain why Transfer payments are not included in the G component of AD

Explain the relationship between Government Spending and the trade cycle

What is meant by a Budget Deficit