Definitions

Question 1

Aid

Answer 1

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

Question 2

Autonomous consumption

Answer 2

That part of consumption that is unaffected by income levels

Question 3

Base year

Answer 3

The time when the index number is set to 100

Question 4

Capacity utilisation

Answer 4

The extent to which a firms existing machinery is being used

Actual output/max possible output. X100

Question 5

Capital markets

Answer 5

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

Question 6

Capital output ratio

Answer 6

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

Question 7

Claimant count

Answer 7

Uk measurement of unemp which counts all those recieving job seekers allowance/uc
Excludes those genuinleu looking for work wwho cannot claim benefit

Question 8

Conflict of objectives

Answer 8

In trying to achieve one goal another target is famaged
Ie gov try to boost gdp using tax cuts may cause psnb to rise

Question 9

Consumer expendaiture

Answer 9

Total sum of spenidng by all consumers in a nation
Major component of ad

Question 10

Discouraged workewrs

Answer 10

People who give up looking for a job because they have been rejected so often

Question 11

Economically active

Answer 11

Those in work or seeking work

Question 12

Eurozone

Answer 12

The name used for the group of eu countries that have replaced their national currencies with the euro

Question 13

Expectations

Answer 13

What households or firms think will happen in the future
Optimistic expectations may lead to extra spening and investment and less saving

Question 14

Expendaiture switching policy

Answer 14

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

Question 15

Factor mobility

Answer 15

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

Question 16

Fisher equation of exchange

Answer 16

Mv=pq

Question 17

Fixed exchange rate

Answer 17

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

Question 18

Flow

Answer 18

Variable
Something that changes and is measured over time
Eg growth rate of gdp

Question 19

Freely floating exchange rate

Answer 19

The exchange rate is determined soley by demand for ans supply of the currency

Question 20

Funding for lending scheme

Answer 20

Incentivises banks and building societies to boost their lending to the uk real econ, esp small and medium sized firms (smes

Question 21

Golden rule

Answer 21

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

Question 22

Income induced consumption

Answer 22

That paprt of spending for current use that vaires with the aount of income

Question 23

Index linked

Answer 23

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

Question 24

Keynsian lras cruev

Answer 24

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

Question 25

Lender of last resort

Answer 25

Bank of england who will lend cash to commercial banks to esnssur ethat confidence in the abnjing system renains

Question 26

Libor

Answer 26

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

Question 27

Maturity date

Answer 27

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

Question 28

Monetarism

Answer 28

A belief that inflation is always due to excess money supply and monetary polcy should be used to control excess increases in prices

Question 29

Moral hazard

Answer 29

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

Question 30

More developed econ

Answer 30

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

Question 31

Neutral monetary policy

Answer 31

Keeping interest rates and money supply at a level that doesnt increase or decrease ad

Question 32

Participation rate

Answer 32

The percentage of the general population who are currently employed or are actively seeking work- econmoically active Participatiuoin rate %= econ active/population

Question 33

Planned savings

Answer 33

The amount of income that consumers expect to hold back rather than spend befroe equlibrium nat income is known as

Question 34

Policy instrument

Answer 34

Econ methods or technique used by gov to achieve its goals- eg interest rates txes

Question 35

Policy objective

Answer 35

A target that gov or firms are trying to achieve eg cpi at 2% (more generally bigfeet

Question 36

Primary inccome flows

Answer 36

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

Question 37

Prudential regulation authority

Answer 37

Boe responsible for microprudential regulation Supervision of banks and other financial institutdion

Question 38

Public sector

Answer 38

All local and national governments activities

Question 39

Public sector net borrowing

Answer 39

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

Question 40

Quotas

Answer 40

Physical limits on quantities of imported goods allowed into a country

Question 41

Real

Answer 41

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

Question 42

Reflation

Answer 42

An increase in the level of real output due to an increase in ad

Question 43

Replaccement investment

Answer 43

Buying machines to replace those that have worn out Keeping capital stock at same levl

Question 44

Regional multiplie

Answer 44

When a change in injection spending has a larger impact on local gdp than origional spending

Question 45

Seconfary income flows

Answer 45

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

Question 46

Single european market

Answer 46

Market within eu intended to establish free movemebt of factors of prdctio

Question 47

Stock

Answer 47

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

Question 48

Technological unemp

Answer 48

People discplaced from their jobs due to being replcaed by machines such as robotics or computers

Question 49

Tight labour market

Answer 49

The labour market has more jobs than workers so wages tend to rise

Question 50

Transfer incomes

Answer 50

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

Question 51

Trend growth rate

Answer 51

Lt av increases iin gdp

Question 52

Trend output

Answer 52

Level of gdp that would occur if there were no econ cycles but gdp grew at its average rate

Question 53

Un hdi

Answer 53

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

Question 54

Vacancy

Answer 54

Unfilled job

Question 55

Viisbles

Answer 55

Goods that are traded tangible

Question 56

Weighting

Answer 56

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

Question 57

Wto

Answer 57

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