ECON6001 S2 2022 2023 Final Summer

Natural rate of unemployment

Reflects both the structural and frictional unemployment rate.

Real GDP

Nominal GDP adjusted for changes in prices.

Fiscal Policy

Influences taxation and government expenditure measures.

Countercyclical fiscal policy

Government expenditure is increased and taxation is reduced in an economic downturn.

Rate of inflation calculation

(y2 - y1) / y1 * 100.

CPI

A measure of inflation.

Decrease in Real GDP

None of the above are true.

Tackling inflation with monetary policy

Increase the reserve ratio and increase interest rates.

False statement about automatic stabilisers

They are deliberately put in place by government e.g. increase in jobseekers allowance.

Functions of money

All of the above.

Managed floating exchange rate system

Exchange rate finds its equilibrium in line with demand and supply conditions with central bank intervention.

Increasing supply of money

Buy government bonds and securities in the money market.

Narrow definition of money (M1)

Coins, notes, and current accounts.

Exchange rate at parity

€145 for a handbag costing Stg£145.

Effect of inflation on trade in Ireland

Encourage imports and discourage exports.

Domestic currency devaluation effect

Increased exports in the domestic economy.

Firm value added calculation

Sales minus the cost of inputs.

Total wealth produced by a country

The Output method, the Income Method, & the Expenditure Method.

Circular Flow of Income in open economy

The flow of all transactions in an economy plus the foreign market.

Unemployment rate calculation

(number of unemployed / total population) * 100.

Production focused government policies

Supply-side policies.

Euro depreciation case

The euro depreciated relative in value to the American dollar.

Not a function of the Central Bank

Accepting deposits from Irish consumers.

Nominal GDP in base year

The value of current year output in prices of the current year.

Bank money creation with RRR

€38,750 from an initial deposit of €1,550.