Definitions

Question 1

Underemployment

Answer 1

When a worker has a job but is working fewer hours that they would like

Question 2

Unemployment

Answer 2

People who are actively seeking employment at prevailing wage rate but are unable to find it

Question 3

What are the 2 measures of unemployment

Answer 3

Climant count

And

LFS/LO

Question 4

Climant count

Answer 4

Number of people currently signing in to claim job seekers allowance

Question 5

LFS/LO

Answer 5

Labour force of 60 000 households identifying the number of people out of work , directly searching and willing to start in the next two weeks

Question 6

Inflation

Answer 6

Sustained rise in the general price level

Question 7

Deflation

Answer 7

Sustained fall in the general price level

Question 8

Disinflation

Answer 8

Fall in the rate at which price rises

Question 9

Core inflation

Answer 9

Inflation Measured without the most volatile prices eg energy and food

Question 10

Hyperinflation

Answer 10

When price rises extremely quickly
Usually and excess of 100 % per year

Question 11

Anticipated inflation

Answer 11

Inflation economic agents expects and factor into there decisions

Question 12

Unanticipated inflation

Answer 12

Inflation is higher than economic agents expect

Question 13

Basket of goods

Answer 13

Most popular product and services majority of the population spend there
Money on

Question 14

Demand push inflation

(Changes to AD)

Answer 14

Average price increase because of an increase in AD

Question 15

Cost push inflation

(Changes to Aggregate supply )

Answer 15

Inflation caused by rising cost of production

(Supply leading to increases costs )

Question 16

Benign deflation

Answer 16

Fall in costs that acts as a boost to real incomes

Question 17

4 things about benign inflation

Answer 17

Creates a short run economic growth

Reduces GPL ( target rate 2+-1%)

Increase employment

May improve current account balance

Question 18

Malign deflation

Answer 18

Fall in general price level caused by a fall in AD

Question 19

4 things about malign inflation

Answer 19

Fall in short run economic growth possible recession

Reduces GPL

Fall in employment

May improve current account balance

Question 20

Monetary policy

Answer 20

Control of Intrest and exchange rates

Question 21

Exchange rates

Answer 21

Price or value of one currency in terms of another

Question 22

Current account deficit

Answer 22

Currency outflows exceed currency inflows

(Spend more money you get in return )

Question 23

Current account surplus

Answer 23

Currency inflows exceeds currency outflows

( more money in than out )

Question 24

Marginal propensity to import ?

Answer 24

The proportion of an increase in income that’s spent on imports

Question 25

Fisical policy

Answer 25

Control of taxation and government spending

Question 26

Monetary policy

Answer 26

Based on control of Intrest rates ,money supply and exchange rates

Question 27

Expansionary

Answer 27

Promotes economic growth by increasing AD , increasing GDP

Question 28

Loosening

Answer 28

Spending more

Question 29

Contractionary

Answer 29

Reduces AD to combat demand pull inflation

Question 30

Tightening

Answer 30

Spending less

Question 31

Pro cyclical

Answer 31

Works in line with business cycle

Question 32

Counter cyclical

Answer 32

Works against business cycle

Question 33

Progressive tax

Answer 33

Takes higher proportion of high earners income

Question 34

Proportionate tax

Answer 34

Takes same percentage of income

Question 35

Regressive tax

Answer 35

Low earners paying higher proportion of income tax

Question 36

Direct tax

Answer 36

Paid directly to individuals or organisation , tax on wages / salaries

Question 37

Indirect tax

Answer 37

Tax on goods and services

Question 38

Budget deficit

Answer 38

Govement spend more than they make (National debt increases)

Question 39

Budget surplus

Answer 39

Govement make more than they spend (National debt decreases )

Question 40

Balanced budget

Answer 40

Tax revenue = government spending

Question 41

Discretionary fisical policy

Answer 41

Gov makes conscious decision to change taxes or government spending

Question 42

Free market supply side policy

Answer 42

Policies designed to increase productive capacity by reducing government Involvement

Question 43

Interventionist side policy

Answer 43

Increase productive capacity by increasing the role of the government Eg subsidy

Question 44

Long run economic growth

Answer 44

Increase in real G.D.P caused by an increase in productive capacity

Question 45

Short run economic mimic growth

Answer 45

Increase in G.D.P caused by an increase use of it productive capacity (i.e increase in AD)

Question 46

Shifts AD

Answer 46

Demand side policies

Question 47

Shifts LRAS

Answer 47

Supply side policies Change in Q/Q/T of F.O.P

Question 48

Shifts SRAS

Answer 48

Changes in c.o.p Price of raw materials Eg indirect taxes / wages