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Economics 2.3.3
Economics- Edexcel 2.3.3
| Question | Answer |
|---|---|
| LRAS | long run aggregate supply |
| long run aggregate supply | represents the maximum possible output when all the factors of production are fully and efficiently employed, independent of price level |
| main factors causing shifts in LRAS | change in quantity and quality of an economy’s factors of production |
| examples of changes in quantity and quality of an economy’s factors of production | higher productivity of labour & capital/growing population & increased labour market participation/innovation & enterprise/capital investment/stock of natural |
| changes in nation’s potential GDP brought by | changes labour supply, stock of capital inputs(from gross capital investment), quality or efficiency of inputs/advances in tech, improvements in institutions |
| outward shift of LRAS | increase in potential output and employment, signifying real economic growth |
| what is the ability of an economy to produce goods and services to meet demand based on in the long run? | state technology and the availability and quality of factor inputs |
| factor inputs | factors of production |
| productivity | measures the efficiency of the production process(how much output of goods and services we get from a given quantity of inputs) |
| productivity is measured by | output per worker employed/output per person hour/value added from each extra factor input employed |
| productivity gap | the difference between one county's productivity levels, as measured by output per workers or output per hour worked, in comparison with the country's main export competitors |
| benefits of net inward migration | fresh skills/higher labour productivity/increase size active labour supply(shifts LRAS)/innovation/positive multiplier effects if add to government tax revenues/reduce skilled-labour shortages/remittances add to GNI of home nations/tax revenues |
| risks of net inward migration | welfare costs/possible displacement of domestic workers/social tensions/rising demand for housing forcing up property prices/poverty risk & exploitation |
| effects of labour migration depend on | type of people and their skills/ease that they settle in/if rise in labour migration stimulates economy/level of innovation/long term or temporary |
| fiscal effects of inward migration | increased pressure on government spending but a rise in tax revenues |
| effect on consumption from inward migration | increase in population size, rising demand for public services, higher house prices and rising rent |
| effect on labour market from inward migration | increase in the active labour supply can lower unit labour costs for a host country |
| effect on competitiveness from inward migration | human capital generate ideas and products, start businesses(possible exporters), knowledge spillovers |
| competition policy aims | promote competition between firms and improve efficiency of products |
| 4 main aspects of UK competition policy | antitrust and cartels/market liberalisation/state aid control/merger control |
| competition policy: antitrust and cartels | involves eliminating illegal agreements that restrict competition and any abuse of market power, e.g. price fixing |
| competition policy: market liberalisation | involves introducing competition or contestability in sectors that have been dominated by large monopolistic firms, done through deregulation, privatisation, breaking up of markets |
| competition policy: state aid control | involves analysing role of state in supporting industries so they don’t overly distort competition |
| competition policy: merger control | involves investigating mergers between firms to ensure they don’t end up with monopoly power |
| recent advances in technology that impacted LRAS | 3D printing/cloud based AI/blockchain tech/quantum computing/custom vaccines/nuclear fission/wearable technologies/drones |
| possible advantages of automation | improve product quality/shorter working weeks for labour/rising productivity/safer working conditions with fewer accidents/lower operating costs for businesses(open more and no sick days) |
| possible disadvantages of automation | job loss/initial large capital expenditure by businesses/reduced flexibility/risk of hacking |
| human capital | skills, experience, aptitude and attitudes of human input into the production process |
| positive externalities | exist when the benefit to society is greater than the benefit to an individual |
| specific skills | skills that are specialist and focused on one job |
| tertiary education | education beyond secondary education to college or university |
| vocational education | also called career or technical education, education that provides practical skills |
| brain drain | a slang term that indicates a substantial emigration or migration of individuals |
| key changes to UK’s demography | migration/number of single person households/number of births/life expectancy/ageing population/people in higher socio-economic class live longer than those in the lowest |
Created by:
jessharris
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