Macro economic objectives (Economic Growth (Economic cycle- The periodic…
Macro economic objectives
Increase in the total value of income, output or expenditure over a period of time.
GDP (Gross Domestic Product)-
measurement of Economic growth.
Total market value of all final good and services produced within an economy.
Limitation of GDP as a measure of growth
PARALELL ECONOMY- Includes economic activity unrecorded by the government, includes black market ect.
NOT REAL- Cannot use to compare to other years as disregards inflation and price changes. Can change to real GDP to compare.
The periodic fluctuations of GDP in an economy over a period of time.
Recession- Output decreases (6 month of negative growth), Unemployment rising (lack of demand for product), Inflation falling (prices may fall)
Recovery- Output increases (growth is positive), Unemployment decreasing (business gaining confidence), Inflation rising (but still be low)
Downturn- Output decreasing (growth possibly stops), Unemployment rises (rid of workers as concerned about future), Inflation slows down (demand starts to fall)
Boom- Output high (high confidence), Unemployment low (wages increase), Inflation high (increase demand)
Impact of ...on
Living standards- high
output > unemployment < household income> demand>
Living standards- low
output< unemployment> household income< demand<
A general increase in the average prices of goods and services.
decrease in the value of savings
when prices are driven up by a rise in demand
When rising costs result in higher prices or smaller profit margins
Rise in a boom: fall in a recession
wages- less value
exports- less price competative
business confidence- high
A general decrease in the average prices of goods and services
When someone is without work but actively seeking job.
unemployment rate= number unemployed/ labour force x 100
specific times of the year
when entire industries close down
when production becomes more capital intensive
between end of education or old job and new job
Follows pattern of economic growth. High in a recession low in a boom.
use of scarce resources- decrease
government spending on benefits- increase
tax revenue- decrease
consumer confidence- decrease
business confidence -decrease
society- negative impact