Economics Macro

GDP

Growth Domestic Product - Sum of all transactions and total value of all goods and services

Nominal and real terms

Nominal - Current money terms

Real - Nominal minus inflation

GDP per capita

The value of output produced by a country in a year divided by the population of the country

Inflation

The sustained rise in average price level in the economy over a period of time

Deflation

A fall in the general price levels

Disinflation

As a fall in the rate of inflation; prices are rising but at a slower rate

What is the target inflation?

2% of CPI (Consumer Price Index) with a range of ± 1% and was set by government but bank of england are in charge of achieving it

Unemployment

When someone is registered as able, available, and willing to work at the going wage rate in a suitable job but cannot find work despite an active search for work. They are economically inactive if they are not in work.

Types of unemployment (6 types)

Real wage/Classical Unemployment - Wages above equilibrium level

Structural Unemployment - Due to technological changes and can be long term

Cyclical Unemployment - Low growth and in a recession

Seasonal Unemployment - Due to changes in demand over the course of a year

Frictional Unemployment - Moving between jobs

Regional Unemployment

Trade Deficit

Value of import is greater than value of exports

Trade Surplus

Value of exports is greater than value of imports

Export (Example and definition)

Money enters UK (inflow)

E.G. Uk company selling to french customers

Imports (Example and definition)

Money leaves the UK (outflow)

E.G. French companies selling to UK customers

Balance of Payments (BoP) accounts (3 - 1 main one)

1. Current accounts

2. Capital accounts

3. Financial accounts

Current accounts (sub accounts)

1. Trade in goods (imports and exports)

2. Trade in services

3. Investment income - interest and dividends (shares for stocks when they increase value) from a foreign bank/stocks

4. Current transfers - a. government, b. household