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Definitions Flashcards

1
Q

Balance of payments

A

A record of a country’s trade and investment with other countries

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2
Q

Business confidence

A

Expectations about the future of the economy

- vital in influencing business decisions about how much to spend on capital goods (investment)

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3
Q

Consumer confidence

A

Expectations about the future based on interest rates, incomes and jobs which affect household expenditure

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4
Q

Cost push inflation

A

Increases in the price level resulting from increases in costs of production

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5
Q

Cyclical unemployment

A

Unemployment resulting from a lack of aggregate demand (demand deficient unemployment)

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6
Q

Depreciation

A

A fall in the value of one currency against another

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7
Q

Disposable income

A

Income after the deduction of direct taxes and the addition of state benefits

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8
Q

Economic growth

A

The growth in the value of output of an economy and, in the long run, an outward shift in the production possibility frontier

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9
Q

Fiscal drag

A

The reduction in disposable income that occurs if tax bands are not adjusted in line with inflation

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10
Q

Frictional unemployment

A

Unemployment arising when people are between jobs

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11
Q

Hyperinflation

A

A very high rate of inflation which causes serious economic problems and political instability

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12
Q

Inflationary noise

A

The distortionary effect inflation can have on price signals

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13
Q

Marginal propensity to consume

A

The proportion of any additional income which is spent rather than saved

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14
Q

Menu costs

A

Costs involved in having to change prices as a result of inflation

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15
Q

Multiplier

A

An increase in an injection into the circular flow of income causing a greater increase in aggregate demand. Formula 1/1-mpc

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16
Q

Shoe leather costs

A

Costs involved in moving money around during a period of inflation in a bid to maintain its real value

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17
Q

Structural unemployment

A

A mismatch in the demand for skills as a result in the changing pattern of industry

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18
Q

Transfer payments

A

Money transferred from one group to another not in return for providing a good or service. Such payments can’t be calculated in calculating GDP

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19
Q

Unemployment trap

A

A situation where some people are financially better off living on unemployment benefits than working

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20
Q

Wealth distribution

A

The extent to which different groups of households share in the total wealth of the country

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21
Q

Actual economic growth

A

An increase in real GDP (as opposed to potential economic growth)

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22
Q

Aggregate demand

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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23
Q

Aggregate supply

A

The total value of output all producers in an economy are willing and able to supply at a given price level / in a given period of time.

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24
Q

Appreciation

A

The rise in value of one currency against another

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25
Austerity
Economic policy aimed at reducing a governments deficit (or borrowing). Austerity can be achieved through increases in government revenues - primarily increasing tax - and/or reduction in government spending or future spending commitments.
26
Automatic stabilisers
Forms of government spending and taxation that dampen down fluctuations without any deliberate changes in government policy
27
Balanced budget
Is one in which government spending equals revenues (neither a deficit nor a surplus)
28
Budget
A statement of a government's spending and tax revenues for the next financial year
29
Budget defecit
When government spending exceeds tax revenue. Reducing the deficit can be achieved by austerity measures or a period of economic growth.
30
Budget surplus
When tax revenue exceeds government spending
31
Capacity utilisation
Measures how much of an economy's productive potential is being used. Utilisation falls during a recession
32
Capital market
A stock or bond market where firms can raise money for investment purposes
33
Claimant count
The number of people claiming unemployment-related benefits. One of the measures of unemployment (cf. Labour Force Survey)
34
Comparative advantage
The ability to produce a product at a lower opportunity cost than other countries, regions, firms or people.
35
Consumer Price Index
This is the preferred meaner of inflation which excludes housing costs but includes all households. (cf. retail price index)
36
Circular Flow of Income
This is the flow of products/services and income between producers/firms and households/consumers
37
Closed economy
An economy which is operating without imports or exports
38
Corporation tax
A tax on a firms profits; a direct tax
39
Current account balance
A record of a country's trade in goods, trade in services, income and current transfers
40
Cyclical trade deficit
A trade deficit which that arises purely due to changes in the economy's cycle, e.g many countries run a deficit when their economy is growing strongly as increased aggregate demand sucks in imports
41
Deflation
A sustained fall in the average price level - 'inflation' below 0%
42
Deflationary fiscal policy
Measures using government spending and/or taxation designed to reduce aggregate demand
43
Demand management policies
This refers to the range of monetary and fiscal policies to influence the aggregate demand for goods and services in an economy
44
Demand pull inflation
Increases in the average price level resulting from excessive increases in aggregate demand
45
Deregulation
The removal of laws and regulations which restrict competition
46
Developing countries
Countries generally lacking a high degree of industrialisation and/or other measures of development
47
Direct taxes
Taxes on income and wealth of people and firms. Income and corporation taxes are direct taxes.
48
Discretionary income
Income after the deduction of direct taxes and essential bills and the addition of state benefits (cf. disposable income)
49
Disequilibrium
A situation of unbalance
50
Dividends
A share in the profits of firms which is distributed to shareholders
51
Domestic trade
The exchange of products within an economy
52
Dumping
When a producer in one country exports a product to another country at a price below that which it charges in its home country or below the costs of supply
53
Economic Cycle
Variations in the annual rate of growth of an economy over time. The stages of the cycle include recovery, boom, slow down and recession
54
Economic Growth
The growth in the value of output of an economy and, in the long run, an outwards shift in the production possibility frontier
55
Economic stability
The avoidance of volatility in economic growth rates, inflation, unemployment and exchange rates
56
Economically inactive
Those who are of working age but are neither in work nor actively seeking work
57
Exchange rate
a
58
Expansionary Monetary Policy
Changes in the money supply (increase), rate of interest (cut) and/or exchange rate (lower) which are designed to simulate aggregate demand
59
Expectations
How we anticipate the future to unfold. This can have powerful effects on the decisions of households, firms and governments.
60
Fiscal Policy
The taxation and spending decisions of a government

Macro (7 decks)

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