All Definitions Flashcards
Automatic Stabilisers
Forms of government spending and taxation that dampen down the affects of fluctuations without government policy changes.
Balance of Payments
A record of a countries trade and investment with other countries.
Bilateral Exchange Rate
The exchange rate comparison between two countries.
Budget Deficit
Expenditure exceeds revenue.
Budget Surplus
Revenue exceeds expenditure.
Capital Output Ratio
The amount of capital required to generate each unit of output.
Claimant Count
The number of people claiming unemployment benefits.
Catch-up Affect
A theory believing, poorer economies grow more rapidly than richer ones then all economies will converge in terms of per capita income. Economically becoming similar.
Crowding-out
Government spending that drives down private sector spending.
Customs Union
An agreement between two or more to abolish tariff’s on trade and place a common tariff on countries in in the agreement.
Cost Push Inflation
Increases in the average price levels as a result of increases in the cost of production.
Cyclical Unemployment
Unemployment resulting from the lack of aggregate demand.
Demand Pull Inflation
Increases in the average price level resulting from excessive increases in aggregate demand.
Economic Growth
The growth in the value of output in the economy.
Dependancy Ratio
Proportion of the population who are too young, too old or too sick to work and are reliant on the output of those who are working.
Developed Economy
Countries with a high income per capita and diversified industrial and tertiary sectors of the economy.
Expenditure reducing policies
To control demand and limit spending on imports - squeeze on demand, encouraging rising private sector saving.
Expenditure switching policies
To change the relative prices of exports and imports - this causes changes in spending away from imports and towards domestic/export production
Fiscal Policy
A governments policy in regards to taxation, public spending. It can be loose/expansionary or tight/deflationary.
Tariff
A tax on imports
Inflation
The continuous rise in average price levels
Labour Force Survey
Those of which have been out of work for 4 weeks and are available for work in the next 2. High value.
Long-run Economic Growth
The rate of which a country’s potential output could grow as a result of changes in the economies capacity to produce goods.
Macroeconomic objectives
Low Inflation, Economic growth, low unemployment
Marshall-Lerner Condition
For a depreciation of currency to improve the balance of trade the sum of PE of D for imports and exports need to be >1.
Monetary Policy
Changes in the money supply, rate of interest and exchange rate.
Expansionary Monetary Policy
Changes in the money supply (increase), rate of interest (cut) and exchange rate (lower) which are designed to stimulate aggregate demand.
Monetary Transmission Mechanism
The way in which monetary policy affects the inflation rate through the impact it has on other macroeconomic varieties.
Multiplier
An increase in the levels of injections in the circular flow of which increases aggregate demand.
National Debt
The total amount of money which a country’s government has borrowed.
Output Gap
The difference between actual and potential output of an economy.
Supply-Side Policies
Policies design to increase the economies long term economic growth.
