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Macroeconomics Flashcards
Free A Level Economics Revision Cards
Cover aggregate demand, aggregate supply, economic growth, inflation and the policy tools used by governments and central banks with these free A Level Macroeconomics flashcards.
Question
What is macroeconomics?
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Answer
The branch of economics concerned with the performance of the economy as a whole — studying GDP, inflation, unemployment, economic growth, and government policy.
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Question
What is GDP and how is it measured?
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Answer
Gross Domestic Product: the total monetary value of all goods and services produced in a country in a given period. Measured by the expenditure method: C + I + G + (X − M).
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Question
What are the main macroeconomic policy objectives?
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Answer
Economic growth (rising real GDP), low and stable inflation (e.g. 2% CPI target), low unemployment, balance of payments equilibrium, and increasingly, environmental sustainability.
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Question
What is inflation and how is it measured in the UK?
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Answer
A sustained rise in the general price level — reducing purchasing power. Measured by the Consumer Price Index (CPI) and Retail Price Index (RPI) — tracking a "basket" of typical goods and services.
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Question
What causes demand-pull inflation?
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Answer
Occurs when aggregate demand exceeds aggregate supply — "too much money chasing too few goods." Often caused by strong economic growth, government spending, or loose monetary policy (low interest rates).
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Question
What causes cost-push inflation?
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Answer
Rising production costs (e.g. wages, raw materials, energy) push prices up. Supply-side shock — examples: oil price spikes, supply chain disruptions. Can cause stagflation (inflation + recession).
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Question
What is unemployment and how is it measured?
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Answer
People of working age who are without a job but are actively seeking and available for work. Measured by the claimant count (those claiming unemployment benefits) or the Labour Force Survey.
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Question
What are the types of unemployment?
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Answer
Frictional (between jobs), structural (skills mismatch), cyclical/demand-deficient (recession), seasonal, and technological (automation displacing workers).
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Question
What is fiscal policy?
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Answer
Government use of taxation and spending to influence the economy. Expansionary: increase spending / cut taxes (stimulate demand). Contractionary: cut spending / raise taxes (reduce inflation).
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Question
What is monetary policy?
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Answer
Central bank control of money supply and interest rates. In the UK, the Bank of England sets the base rate. Higher rates: reduce borrowing and spending (combat inflation). Lower rates: stimulate growth.
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