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AS Economics definitions Macro > Definitions > Flashcards

Definitions Flashcards

1
Q

Aggregate Demand (AD)

A

the total demand for a country’s goods and services at a given price level and in a given time period

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2
Q

Aggregate Supply (AS)

A

the total amount that producers in an economy are willing and able to supply at a given price level in a given time period

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3
Q

allocative efficiency

A

when consumer satisfaction is maximised

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4
Q

automatic stabilisers

A

forms of government spending and taxation that change automatically to offset fluctuations in economic activity

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5
Q

average propensity to save (APS)

A

the proportion of disposable income saved. It is saving divided by disposable income

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6
Q

average propensity to consume (APC)

A

the proportion of disposable income spent. It is consumer expenditure divided by disposable income

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7
Q

balance of payments

A

a record of money flows coming in and going out of an economy

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8
Q

capacity utilisation

A

the extent to which firms are using their capital goods

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9
Q

capital

A

man-made aids to production

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10
Q

circular flow of income

A

the movement of spending and income throughout the economy

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11
Q

claimant count

A

a measure of unemployment that includes those receiving unemployment-related benefits

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12
Q

consumer confidence

A

how optimistic consumers are about future economic prospects

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13
Q

consumer expenditure

A

spending by households on consumer products

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14
Q

consumer prices index

A

a measure of changes in the price of a representative basket of consumer goods and services. Differs from the retail price index (RPI) in methodology and coverage

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15
Q

corporation tax

A

a tax on firms’ profits

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16
Q

cost-push inflation

A

increases in the price level caused by increases in the costs of production

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17
Q

current acccount deficit

A

when more money is leaving the country than entering it, as a result of sales of its exports, income and current transfers from abroad being less than imports, income and current transfers going abroad

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18
Q

cyclical unemployment

A

unemployment arising from a lack of aggregate demand

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19
Q

deflation

A

a sustained fall in the general price level

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20
Q

demand-pull inflation

A

increases in the price level caused by increases in aggregate demand

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21
Q

developed economy

A

an economy with a high level of income per head

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22
Q

developing economy

A

an economy with a low level of income per head

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23
Q

direct tax

A

one that taxes the income of people and firms and that cannot be avoided

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24
Q

disposable income

A

income after taxes on income have been deducted and state benefits have been added

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25
Q

dissave

A

spending more than disposable income

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26
Q

distribution of income

A

how income is shared out between househoulds in a country

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27
Q

economic cycle

A

the tendency for economic activity to fluctuate outside its trend growth rate, moving from a high level of economic activity (boom) to negative economic growth (recession)

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28
Q

economic efficiency

A

where both allocative and productive efficiency are achieved

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29
Q

economic growth

A

in the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is, in the maximum output that the economy can produce

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30
Q

economically inactive

A

people of working age who are neither employed nor unemployed

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31
Q

exchange rate

A

the price of one currency in terms of another currency or currencies

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32
Q

exports

A

products sold abroad

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33
Q

deflationary

A

policy measures designed to reduce aggregate demand

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34
Q

discretionary fiscal policy

A

deliberate changes in government spending and taxtation designed to influence aggregate demand

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35
Q

Fiscal drag

A

People’s income being dragged into higher tax bands as a result of tax brackets not being adjusted in line with inflation

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36
Q

Fiscal policy

A

The taxation and spending decisions of a government

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37
Q

Frictional unemployment

A

Short-term unemployment occurring when workers are in-between jobs

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38
Q

Full employment

A

A situation where those wanting and able to work can find employment at the going wage rate

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39
Q

Government bond

A

A financial asset issued by the central or local government

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40
Q

Government spending

A

Spending by the central bank and local government on goods and services

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41
Q

Gross domestic product(GDP )

A

The total output of goods and services produced in a country

42
Q

Human capital

A

Education, training and experience that a worker, or group of workers, possess(es)

43
Q

Hyperinflation

A

An inflation rate above 50 per cent

44
Q

Hysteresis

A

Unemployment causing unemployment

45
Q

Imports

A

Products bought from abroad

46
Q

Inflation

A

A sustained rise in the price level;the percentage increase in the price level over a period of time

47
Q

Inflationary rise

A

The distortion of price list alas caused by inflation

48
Q

Injections

A

Additions of extra spending into the circular flow of income

49
Q

International labour organisation (ILO)

A

A member organisation of the Unites Nations that collects statistics on labour market conditions and seeks to improve working conditions

50
Q

Investment

A

Spending on capital goods

51
Q

Labour

A

The quantity and quality of human resources

52
Q

Labour force

A

The people who are employed and unemployed,that is, those who are economically active

53
Q

Labour force survey

A

A measure of unemployment based on a survey using the ILO definition of unemployment

54
Q

Labour productivity

A

Output of a good or service per worker in a given time period

55
Q

Leakages

A

Withdrawals of possible spending from the circular flow of income

56
Q

Long-term unemployment

A

Unemployment lasting for more than a year

57
Q

Macroeconomic equilibrium

A

A situation where aggregate demand equals aggregate supply and real GDP is not changing

58
Q

Menu costs

A

The costs of changing prices due to inflation

59
Q

Macroeconomics

A

Looks at the economy as a whole

60
Q

Monetary policy

A

Central bank and /or government decisions on the rate of interest, the money supply and the exchange rate

61
Q

Monetary policy Committee

A

A Committee of the Bank of England with responsibility for setting the interest rate in order to meet the government’s inflation target

62
Q

Multiplier effect

A

The process by which any change in a component of aggregate demand results in a greater final change in real GDP

63
Q

Net exports

A

The value of exports minus the value of imports

64
Q

Net savers

A

People who save more than they borrow

65
Q

Nominal GDP

A

Output measured in current prices and so not adjusted for inflation

66
Q

Occupational immobility of labour

A

Difficulty of moving from one type of job to another

67
Q

Output gap

A

The difference between an economys actual and potential real GDP

68
Q

Overheating

A

The growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation

69
Q

Price level

A

The average of the prices of all the products produced in an economy

70
Q

Privatisation

A

Transfer of assets from the public to the private sector

71
Q

Productive potential

A

The maximum output that an economy is capable of producing

72
Q

Productive efficiency

A

Where production takes a place using the least amount of scarce resources

73
Q

Productivity

A

Output, or production, of a good or service per worker

74
Q

Progressive tax

A

A tax that takes a higher percentage from the income of the rich

75
Q

Protectionism

A

The protection of domestic industries from foreign competition

76
Q

Quota

A

A limit on imports

77
Q

Rate of interest

A

The charge for borrowing money and the amount paid for lending money

78
Q

Real disposable income

A

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

79
Q

Real GDP

A

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

80
Q

Real interest rate

A

The nominal interest rate minus the inflation rate

81
Q

Recession

A

A fall in real GDP over a period of six months or more

82
Q

Reflationary

A

of policy measures designed to reduce aggregate demand

83
Q

Regressive tax

A

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

84
Q

Retail prices index RPI

A

Measure of inflation that is used for adjusting pensions and other benefits to take account of changes in inflation and frequently used in wage negotiations. Differs from the consumer prices index CPI

85
Q

Retained profits

A

Profit kept by firms to finance investment

86
Q

Saving

A

Real disposable income minus spending

87
Q

Savings ratio

A

Savings as a proportion of disposable income

88
Q

Shoeleather costs

A

Costs in terms of the extra time and effort involved in reducing money holdings.

89
Q

Structural unemployment

A

Unemployment caused by the decline of certain industries and occupations due to changes in demand and supply

90
Q

supply side policies

A

policies designed to increase aggregate supply by improving the efficiency of labour and product markets

91
Q

sustainable economic growth

A

economic growth that can continue over time and does not endanger future generations’ ability to expand productive capacity

92
Q

target savers

A

people who save with a target figure in mind

93
Q

tariff

A

a tax on imports

94
Q

trade deficit

A

the value of imports exceeding the value of exports

95
Q

trade surplus

A

the value of exports exceeding the value of imports

96
Q

trend growth

A

the expecting increase in potential output over time. it is a measure of how fast the economy can grow without generating inflation

97
Q

unemployment rate

A

the percentage of the labour force who are out of work

98
Q

unemployment

A

a situation where people are out of work but are willing and able to work

99
Q

voluntary export restraint (VER)

A

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

100
Q

World Trade Organisation(WTO)

A

an international organisation that promotes free international trade and rules on international trade disputes

AS Economics definitions Macro (1 decks)

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