Definitions Flashcards
Aid
Money good and service and soft loans given by the gov of one country or multilateral institution such as the world bank to help another country
Ngos such as oxfam also provide aid
Autonomous consumption
That part of consumption that is unaffected by income levels
Base year
The time when the index number is set to 100
Capacity utilisation
The extent to which a firms existing machinery is being used
Actual output/max possible output. X100
Capital markets
Where securities such as shares and bonds are issued to raise medium to long term financing and where shares and bonds are traded on the second hand part of the market
Eg london stock exchange
Capital output ratio
The relationship between the number of machines and the quantity they produce is fixed
One machine may be able to produce 100m nails a day
Claimant count
Uk measurement of unemp which counts all those recieving job seekers allowance/uc
Excludes those genuinleu looking for work wwho cannot claim benefit
Conflict of objectives
In trying to achieve one goal another target is famaged
Ie gov try to boost gdp using tax cuts may cause psnb to rise
Consumer expendaiture
Total sum of spenidng by all consumers in a nation
Major component of ad
Discouraged workewrs
People who give up looking for a job because they have been rejected so often
Economically active
Those in work or seeking work
Eurozone
The name used for the group of eu countries that have replaced their national currencies with the euro
Expectations
What households or firms think will happen in the future
Optimistic expectations may lead to extra spening and investment and less saving
Expendaiture switching policy
A gov policy which aims to eliminate a current account deficit by switching domestic demand away from imports to domestically produced goods
Conversely to reduce a current account surplus, the policu would aim to switch domestic demand away from domestically produced goods towards imports
Factor mobility
The econ resources can easily move to diff uses and areas
Eg labour can easily move goegraphically or capital can be switched to produce diff products
Fisher equation of exchange
Mv=pq
Fixed exchange rate
An exchange rate miantained at a certain level (price in terms of other currencies) by the central banks intervention in the foriegn exchange makret or by changing interest rates to influence hot money flows
Flow
Variable
Something that changes and is measured over time
Eg growth rate of gdp
Freely floating exchange rate
The exchange rate is determined soley by demand for ans supply of the currency
Funding for lending scheme
Incentivises banks and building societies to boost their lending to the uk real econ, esp small and medium sized firms (smes
Golden rule
Over tje course of the econ cycle the gov will borrow only to invest (eg in infrasturcture or education and training) and not for current spending on wages of public sector employees or the welfare state
Policy associated withh the last lab gov and is the stated ppoluc of the current labour party
Income induced consumption
That paprt of spending for current use that vaires with the aount of income
Index linked
The coupling of benefits, salaries or pensions etc to the retail price index in order to make sure that the real value is maintained
Ie the income form them keeps pace with inflation
Keynsian lras cruev
The amount that will be produced by a nation at every price level according to keynes who believed that macroeconomics equlibirum could occur below full capacity output
Lender of last resort
Bank of england who will lend cash to commercial banks to esnssur ethat confidence in the abnjing system renains
Libor
London interbank offered rate
Interest rate that banks charge to lend to each other
This became high when supply of loans was cut during the credit crunch
Maturity date
The date on which the issuer of a dated secuirty such as a gilt edged secuirty (long dated) or treasuriy bill (short dated) pays the face valkue of the secuirty to the owner of the secuirty
Monetarism
A belief that inflation is always due to excess money supply and monetary polcy should be used to control excess increases in prices
Moral hazard
The tendency of individ and firms, once protected against a contingency to behave so as to make the contingency more likely
Eg banks may be more likely to take risks with savers money in the knoweldge that the central bank or gov will bail them out
More developed econ
Countries with a high degree of econ development, high average incomme per head, high standards of living, usually with servicce indistries dominating manufcturing and investment having taken place over many years in human capital and infrastructure
Neutral monetary policy
Keeping interest rates and money supply at a level that doesnt increase or decrease ad
Participation rate
The percentage of the general population who are currently employed or are actively seeking work- econmoically active
Participatiuoin rate %= econ active/population
Planned savings
The amount of income that consumers expect to hold back rather than spend befroe equlibrium nat income is known as
Policy instrument
Econ methods or technique used by gov to achieve its goals- eg interest rates txes
Policy objective
A target that gov or firms are trying to achieve eg cpi at 2% (more generally bigfeet
Primary inccome flows
Inward primary income flows comprising earnings flowing into the ecno in the current year, which is generated by a countrys citizens assets overseas
Outward primary income flows compirse of earning flowing out of an econ due to assets in the econ bineg owned by foriegners
Prudential regulation authority
Boe responsible for microprudential regulation
Supervision of banks and other financial institutdion
Public sector
All local and national governments activities
Public sector net borrowing
Psnb
Amount of money that a gov has to borrow in one financial year due to the fact it is spending more than it recieves in revenue
Gov spending- gov reciepts
Quotas
Physical limits on quantities of imported goods allowed into a country
Real
Measured in quantity terms
To gain real values nominal figures- current prices, need to be adjusted for inflation to see whether more can be pruchased with the amount of pounds than before
Reflation
An increase in the level of real output due to an increase in ad
Replaccement investment
Buying machines to replace those that have worn out
Keeping capital stock at same levl
Regional multiplie
When a change in injection spending has a larger impact on local gdp than origional spending
Seconfary income flows
Current transfers such as gifts of money, international aiid and gov transfers such as transfers between uk and eu flowing into and out of an econ in a particular year
Single european market
Market within eu intended to establish free movemebt of factors of prdctio
Stock
Two meanings
Spare raw materials, work in progress or finished goods that businesses keep
A q at a particular point in time- eg wealth as opposed to a flow which changes like income
Technological unemp
People discplaced from their jobs due to being replcaed by machines such as robotics or computers
Tight labour market
The labour market has more jobs than workers so wages tend to rise
Transfer incomes
Grants such as penisons and social secuirty welfare paymennt that is taken from one group eg taxpayers and given to another such as the poor
Dont add into ad
Trend growth rate
Lt av increases iin gdp
Trend output
Level of gdp that would occur if there were no econ cycles but gdp grew at its average rate
Un hdi
Index based on life expectancy, education and per capita income
Four tiers- v high, hgigh, mediuk , low
Closer to one higher level of human development
Vacancy
Unfilled job
Viisbles
Goods that are traded tangible
Weighting
One variable is given mroe influence on an average than another
The rise in bread prices are more significant than the rise in shoelaces because it makes yp a larger part of the households spenidng
Cpi and rpi weighted average
Wto
World trade organisation
International body whose purpose is to promotye free trade by persuading countries to aboish import tarrifs, quotas and other barriers to trade
Wto closely associated iwth rise globalisation
