Economics Exam Revision (Year 10)

Macroeconomics

The study of large-scale economic performance and growth. Key macroeconomic measures are GDP, inflation, and unemployment.

Economic growth

The increasing capacity of the economy to satisfy the wants of its members. A higher rate of economic growth usually results in higher standards of living.

Inflation

A general increase in prices. The Consumer Price Index (CPI), measures change in price of a “basket” of G+S consumed by the average household. The rate of change is called inflation

Frictional unemployment

Unemployment that results from people being in the process of moving from one job to another.

Cyclical unemployment

Unemployment that results from a decrease in demand for goods and services, leading to people losing jobs.

Structural unemployment

Unemployment that results from changes to industries (e.g. technological changes). Usually accounts for 3-4% of unemployed.

Living standards

Material and non-material wellbeing. Material wellbeing refers to access to goods and services. Non-material wellbeing refers to intangible qualities of life (e.g. freedom, happiness)

Monetary policy

A macroeconomic policy by which the government influences interest rates (via the central bank) in order to adjust a nation's economy.

Budgetary / Fiscal policy

A macroeconomic policy by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.

What is a Lorenz curve?

A graphical representation of income inequality or wealth inequality.

Equal distribution on a Lorenz Curve?

Straight diagonal line with a slope of 1. Gini coefficient is 0.

GDP meaning?

The total market value of all final G + S produced in a country during a given period of time (usually a year)

target rates?

GDP 3-4, Inflation is 2-3, unemployment 4.5 - 5