Econs

Define trade in goods deficit

expenditure on imports of goods exceed revenue from exports of goods

Define monetary policy

Supply of money interest rate/foreign exchange rates affecting total demand/inflation

Define free trade

When countries import and export between each other without any protection or restrictions such as tariffs or quotas

Types of economies of scale

Purchasing / buying- bulk buying/lower average cost per unit

managerial- employ specialised managers for specific functions/ increase efficiency and lower average cost per unit

technical- afford specialised machinery/technology increase efficiency and larger output

financial-easy to borrow loans and at lower rates

Functions of money

medium of exchange- money accepted by everyone as payments for goods and services

Standard of deferred payment- used to value goods and record transactions.

Store of value- money can be stored and hold its value overtime

unit of account- money provides a common measure for expressing value of goods

Complacenacy

Firms’ mindset where it doesn’t feel pressure and have incentive

Define market failure

Market failure is when market forces cause an inefficient allocation of resources (1).

when the free market produces or consumes too much or too little of something, compared to what would actually be best (optimal) for society as a whole.

Components of GDP

1. Total output

2. Total income- money earned

3. Total expenditure

Whats deflation and disinflation

Deflation- sustained fall in general price level

Disinflation- inflation slowing down (still positive, but smaller)

whats nominal

Not adjusted to inflation

What is term when worker cant change from job to job

occupationally immobile

When is there only movement along demand/supply curve

When selling price of goods change

Macroeconomic aim include

Low/stable inflation

Low unemployment

Economic growth

Balance of payments stability

Protection of environment

Supply side policy include

Improving education

Lower direct tax

Deregulation

Labour market reform

Subsidy

Privatisation

Weights in CPI show how much average household spends on it

Proportion not prices

what firms do with indirect tax

the firm owes the government a fixed amount of tax for every unit it sells

Define frictional unemployment.

Workers in between jobs

temporary / short term unemployment