Deck 5 (R-Z)

Question 1

Real exchange rate

Answer 1

The nominal exchange rate adjusted for differences in relative inflation rates between countries

Question 2

Real value

Answer 2

Value of an economic variable, taking account of changing prices through time

Question 3

Recession

Answer 3

Occurs when GDP falls for two or more consecutive quaters

Question 4

Retail Price Index (RPI)

Answer 4

A measure of the average level of prices in the UK

Question 5

Revaluation

Answer 5

A process whereby a government raises the price of domestic currency in terms of foreign currency

Question 6

Seasonal unemployment

Answer 6

Unemployment that arises in seasons of the year when demand is relatively low

Question 7

Short-run aggregate supply curve

Answer 7

A curve showing how much output firms would be prepared to supply in the short-run at any given overall price level

Question 8

Short-run economic growth

Answer 8

An increase in actual GDP

Question 9

Structural unemployment

Answer 9

Unemployment arising because of changes in the pattern of economic activity within an economy

Question 10

Supply-side policies

Answer 10

A range of measures intended to have a direct impact on aggregate supply - and specifically the potential capacity output of the economy

Question 11

Sustainable development

Answer 11

‘Development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ - Brundtland Commission 1987

Question 12

Terms of trade

Answer 12

The relative prices at which exchange takes place, the ratio of export prices to import prices

Question 13

Total factor productivity

Answer 13

The average productivity of all factors, measured as the total output divided by the total amount of inputs used

Question 14

Trading possibilities curve

Answer 14

Shows the consumption possibilities under conditions fo free trade

Question 15

Unemployed

Answer 15

People who are economically active but not in employment

Question 16

Visible trade

Answer 16

Trade in goods

Question 17

Voluntary unemployment

Answer 17

Situation arising when an individual chooses not to accept a job at the going wage rate

Question 18

Workforce

Answer 18

People who are economically active - either in employment or unemployed

Question 19

World Trade Organisation (WTO)

Answer 19

A multilateral body responsible for overseeing the conduct of international trade

Question 20

Real disposable income

Answer 20

Income after taxes on income have been deducted and state benefits added and the result has been adjusted to take into account changes in the price level

Question 21

Real GDP

Answer 21

The country’s output measured in constant prices so has been adjusted for inflation

Question 22

Real interest rate

Answer 22

The nominal interest rate minus the inflation rate

Question 23

Reflationary

Answer 23

Policy measures intended to increase aggregate demand

Question 24

Regressive tax

Answer 24

A tax that takes a greater percentage from the income of the poor

Question 25

Savings ratio

Answer 25

The proportion of disposable income that is saved

Question 26

Shoeleather costs

Answer 26

The cost in terms of time and effort (opportunity cost) involved in people trying to counter-act the effects of inflation, such as holding less cash and having to make additional trips to the bank

Question 27

Tariff

Answer 27

A tax on imports

Question 28

Trend growth

Answer 28

The expected increase in potential output over time, measures how fast the economy can grow without generating inflation

Question 29

Voluntary Export Restraint (VER)

Answer 29

A limit placed on imports from a country with the agreement of that country’s government