Economics - mod 2 - unit 3 - part 1

What is the macro-economic objective of the government on the trend rate of growth?

What is the trend rate of growth in the UK?

What is the macro-economic objective of the government on unemployment?

Which method does the government use to measure the rate of unemployment?

What is the macro-economic objective of the government on price stability?

What is the macro-economic objective on trade?

How can the UK reduce its trade deficit?

What is the multiplier effect?

What is the positive and negative multiplier effect?

What is the cause of the multiplier effect?

How will injections and leakages effect the multiplier?

What is the accelerator principle?

What is an economic shock?

Why will economic shocks have a significant effect on the economy?

What is a demand side shock?

What is a supply side shock?

When does an output gap exist in an economy?

What is a positive (inflationary) output gap?

What is a negative (recessionary) output gap?

Define inflation.

How does the government measure inflation in the UK?

How is the CPI used by the Bank of England and UK Treasury?

What is the difference between CPI and RPI?

What is demand pull inflation?

When is demand pull inflation likely to occur?

What is cost push inflation?

Why is inflation a threat to UK economic stability?

Define deflation.

What is the cause of deflation?