6646991
Description
Flashcards by Nikolas Reece, updated more than 1 year ago
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Created by Nikolas Reece
about 8 years ago
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| Question | Answer |
| The governments main economic responsibility | Stabilise the economy |
| The governments four main macroeconomic goals are | economic growth, low inflation rates, low unemployment levels, stable balance of payments |
| Economic Growth | an increase in the national income within the economy as a whole. |
| The governments main economic responsibility | Stabilise the economy |
| The governments four main macroeconomic goals are | economic growth, low inflation rates, low unemployment levels, stable balance of payments |
| define economic growth | an increase in the amount of goods and services produced within the economy as a whole |
| Factors which lead to economic growth | Discovery of new natural resource, Technology progress , Improvements in labour productivity, Growth in working population |
| Factor causing economic decline | Natural disasters, Vast migration of labour, Depletion of natural resources |
| Define national income | A measure of economic activity in an economy over a period of time, usually one year. |
| The three methods of calculationg national income | expenditure, income and output approach |
| The output approach | adding up the value of all the goods and services produced |
| the income approach | adding up the value of the income earned on goods and services |
| the expenditure approach | adding up the value of the money spent on the goods and services C+I+G+(X-M) |
| Gross Domestic Product (GDP) | a measure of output produced in a country over a given period of time, usually one year, using the factors of production located in that country regardless of locally or foreign ownership. |
| Gross National Product (GNP) | measures the value of goods and services that the country's citizens produced regardless of their location GNP = GDP at factor cost + Net property income from abroad |
| Net Property Income from Abroad | Net property income from abroad = Income inflows from abroad income outflows from abroad |
| Income Inflows | are any form of factors incomes (rent, profit, wages, interest) earned by Trinidad nationals who are not located within the countrys borders |
| Income Outflows | any form of factor incomes paid to foreigner citizens |
| GDP at Factor Cost | GDP at Factor Cost = GDP at market prices + Subsidies INDIRECT taxes |
| Subsidies | a financial grant or gift given by the government to producres in order to reduce their costs of production which is passed unto the consumer in the form of lower prices. Eg Trinidad gas subsidy |
| Indirect tax | A tax levied on sales of a good or service eg value added tax VAT |
| Investment | the purchase of capital goods (i.e. assets used to produce more goods) that are not consumed immediately but are used in the future to create wealth. |
| Fixed capital formation | it measures the value of acquisitions of new or existing fixed assets by the business sector, governments and households |
| Factors that influence the level of investment | Interest rates, Risk, Corporate taxes , Business confidence |
| define interest rates | the percentage % paid on the principal when borrowing a loan from a bank or other financial institution |
| Real GDP | the level of output produced in a countryadjusted for inflation by using base year prices. Real GDP = Output x Base Year prices |
| Nominal GDP | the GDP is calculated using prices for the current year this is known as GDP at nominal value Nominal GDP = Output x Current year prices |
| GDP deflator | (Nominal GDP/Real GDP) x 100 |
| Informal or hidden economic activity | the exchange of goods and services which are unrecorded by the government and no taxation is collected eg housekeeping services. |
| Business trade cycle | a graphical representation of fluctuations of economic activity that an economy experiences over a period of time |
| Contraction | a period in which the economy is growing at a rate significantly below normal |
| Depression | a particularly severe or prolonged recession |
| expansion or recovery | this period reflects economic growth shown as an upward movement along the cycle |
| advantages of economic growth | Income generation, Increase in employment, Reduced poverty, Increased productivity, Higher standard of living |
| disadvantages of economic growth | Exhaustion of non-renewable resources, Negative externalities, Increased inequality, Inflation risk |
| Problems with a recession | Unemployment increases, Production of goods and services decreases, Consumer spending falls |
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