Eco (5 - Eco Mng. Policies & Goals)

5: ECONOMIC MANAGEMENT: POLICIES AND GOALS

Students should be able to:
1. explain the role of government in stabilizing the economy;
2. explain the meaning of terms and concepts associated with economic policies and goals;
3. explain the concept of the circular flow of income;
4. illustrate the circular flow of income;
5. distinguish between Gross Domestic Product (GDP) and Gross National Product (GNP);
6. distinguish among nominal output, real output and potential output;
7. distinguish between economic growth and economic development;
8. distinguish between inflation and recession;
9. state the main causes and consequences of inflation and recession on an economy;
10. state ways used by governments to reduce inflation;
11. state ways used by governments to relieve recession;
12. explain the different types of unemployment;
13. outline the role of trade unions in an economy.

CONTENT
1. Role of government, for example, in taxation and expenditure, and transfer policies.
2. Definition of the following terms and concepts:
(a) national budget;
(b) national income;
(c) disposable income;
(d) national debt;
(e) fiscal policy;
(f) fiscal deficit;
(g) monetary policy;
(h) economic growth;
(i) economic development;
(j) developing economy;
(k) developed economy;
(l) balance of payments;
(m) GDP;
(n) GNP;
(o) employment;
(p) unemployment;
(q) inflation;
(r) deflation;
(s) savings;
(t) investment.
3. Flows of goods and services and factors of production between firms and households.
4. Illustration of a basic flow diagram consisting of households, firms, government and financial
institutions.
5. GDP: a measure of national output; GNP: a measure of the increase or decrease in the standard of
living; Calculation of GDP and GNP.
6. Nominal output, real output and potential output.
7. Economic growth and economic development.
8. Inflation and recession.
9. The major causes and consequences of inflation and recession.
10. Government’s role in reducing inflation.
11. Government’s role in relieving recession.
12. Types of unemployment:
(a) structural;
(b) cyclical;
(c) frictional;
(d) seasonal;
(e) real-wage.
13. Causes and measures to reduce each type of unemployment.
14. The role of Trade Unions in a free market economy