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economics theme 2 > all theme 2 > Flashcards

all theme 2 Flashcards

1
Q

circular flow withdrawals

A

savings, taxation, imports

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2
Q

circular flow injections

A

investment, government spending, exports

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3
Q

AD formula

A

C + I + G + (X-M)

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4
Q

7 economic targets

A

controlling inflation
reducing unemployment
economic growth
improving BoP
sustainability
reducing inequality
reducing the debt

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5
Q

gross income

A

before tax

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6
Q

disposable income

A

after tax

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7
Q

discretionary income

A

after tax and bills

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8
Q

MPC

A

how much of an increase in income you spend

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9
Q

MPS

A

how much of an increase in income you save

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10
Q

wealth effect

A

as wealth increases spending increases

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11
Q

accelerator effect

A

an increase in GDP leads to a further increase in investment.

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12
Q

categories of government spending

A

welfare spending / transfer payments
reccurring spending / public services
investment projects / state investment

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13
Q

multiplier effect

A

an initial change in AD can have a much greater effect on the final level of national income

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14
Q

multiplier calcs

A

1/1-MPC
1/MPS
1/MPW

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15
Q

high multiplier characteristics

A

spare capacity
MP to M and T low
high MPC

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16
Q

low multiplier characteristics

A

close to capacity limits
high MP to import
high inflation
rising interest

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17
Q

output gap

A

the difference between actual and potential output in an economy

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18
Q

short run AS

A

shows total output in terms of the cost of production

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19
Q

long run AS

A

shows total output when all FOP are in use and full employment. When all factors are variable

20
Q

factors influences LRAS

A

productivity of labour
workforce population
innovation
capital investment

21
Q

progressive tax

A

rises as incomes rise

22
Q

proportional tax

A

marginal rate is constant, constant average rate

23
Q

regressive tax

A

tax falls as incomes rise

24
Q

discretionary fiscal changes

A

deliberate changes in tax and spemdinh

25
Q

pollution permits

A

companies allowed a certain amount of pollution and can sell unused units to companies that go over their permit

26
Q

minimum pricing

A

setting a floor price which the government doesn’t allow prices to fall below

27
Q

ad velorum tax

A

the more you purchase the more you spend

28
Q

Gross National Product

A

GDP + income from foreign residents - domestic income earned by nonresidents

29
Q

retail price index

A

including mortgage payments

30
Q

current account

A

trade balance (goods/services)
income balance

31
Q

capital account

A

capital transfers (sale of assets)

32
Q

financial account

A

FDI (factories etc)
portfolio investments (financial assets)
other financial items (hot money)
reserves

33
Q

frictional unemployment

A

short term unemployment due to moving jobs

34
Q

structural unemployment

A

skills are no longer relevant

35
Q

cyclical unemployment

A

economic reasons

36
Q

seasonal unemployment

A

parts of the year where a job isn’t needed

37
Q

claimant count

A

out of work
available to work
seeking employment
18 - 66
less than £16000 savings

38
Q

ILO survey / labour force survey

A

out of work for 4 weeks
able to start in 2 weeks
16 - 70

39
Q

phillips curve

A

economics growth leads to less unemployment

40
Q

universal credit

A

6 combined benefits for working age households with low income

41
Q

privatisation

A

the transfer of a business or industry from public to private control

42
Q

deregulation

A

the removal of restrictions in an industry

43
Q

monetary policy tools

A

interest rates
exchange rates
QE
availability of credit

44
Q

uses of money

A

payment for goods and services
deferred payments
exchange
value store
compare what things are worth

45
Q

QE steps

A

bank creates money to buy bonds
demand increase, price up, yield down
those who sold bonds may loan money
credit availability increase
interest rates fall to follow
low rates = more spending
lower yields may also mean depreciation

46
Q

QE eval

A

uncertainty on time and effectiveness
BoE owns most of debt already
wont benefit lower income households
banks may not want to lend
weaker £

47
Q

liquidity trap

A

when interest rates are too low to drop any more and even if they can it will have no effect

economics theme 2 (1 decks)

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