government objectives
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Last updated 2:26 PM on 11/27/22
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32 Terms
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government objectives (5)
Economic growth, Inflation, Unemployment, Balance of Payment (Current Account), Income Distribution.
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result of economic growth
individuals have growing incomes and wealth, government provide more public services
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nominal GDP
total value of goods and services produced in a year
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real GDP
adjusted for inflation
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GDP means
gross domestic product
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3 ways to measure GDP
consumer spending, factor income, value of input
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calculate rate of economic growth
change in GDP/original GDP x 100
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result of economic boom
plentiful jobs, high consumer spending, prices rising, production increases, negative externalities
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result of recession
higher unemployment, reduced income/wealth, economic inequality
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government ways to get economic growth (2)
demand side policies, supply side policies
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demand side policy
cut taxes, cut interest (more spending/more demand)
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supply side policy
privatisation, tax cuts, FTA's, improved education/training
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FTA
free trade agreements
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benefit of more employment
more employees = greater productivity,
less government funding = more money for other areas
less government funding = more money for other areas
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PPF
production possibility frontier
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factors of produciton
capital, enterprise, land, labour
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4 causes of unemployment
seasonal, structural, frictional, cyclical
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seasonal unemployment
agricultural/tourism
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structural unemployment
changes in economy structure and jobs offered, eg. coal
skills are now less useful
skills are now less useful
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frictional unemployment
in between jobs / applying
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cyclical unemployment
recession leads to decline in GDP and jobs available
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measure unemployment
claimant count - people seeking employment and claiming allowance
labour force survey - sample of population taken
labour force survey - sample of population taken
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unemployed people are
actively searching for work
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policies to reduce unemployment
demand side - make people want to employ
supply side - train people and transport
supply side - train people and transport
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CPI
consumer price index - measures change in cost of living in a typical household
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inflation is
fall in purchasing power of money
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inflation rate is
annual percentage change in CPI
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target CPI
2%
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negatives of inflation
investments decrease, erodes wealth, cost of living increases, less exports are purchased
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demand pull inflation
demand > supply
prices have to rise so less people buy stuff
prices have to rise so less people buy stuff
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problems with CPI
changes in quality not taken into account
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Note 
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