definitions (macro) Flashcards
define inflation
an increase in the general price level of goods/services with an economy resulting in a decrease in the purchasing power of money
define deflation
a decrease in the general price level of goods/services within an economy resulting in an increase in the purchasing power of money
define disinflation
a decrease in the rate of inflation (the general price level is increasing, but at a slower rate than before)
define trade deficit
when a country’s total imports exceeds the value of their export revenue
define trade surplus
when the countr’s trade exports revenue exceeds the cost of their imports
define economic growth
an increase in the long term productive potential of an economy( an increase in the quantity of goods and services produced in the economy)
Define GDP
the value of goods and services produced in a country over a given period of time
define power purchasing parities
exchange rate of one country to another that compares cost of living in different countries through comparing the value of a basket of goods
define GNI
gross national income
the value of goods and services produced over a given period of time plus net overseas intrest payments and dividends
define consumer price index
the official measure used to calculate inflation , using a weighted basket of goods
define claimant count
a measure of unemplyment; the number of people recieving benefits for being unemployed
define unemployment
those who are without work and able to start working in the next 2 weeks and have been activley searching for work in the past 4 weeks
define the labour force survey
a measurment of unemployment which surveys people and classes thm as employed, unemployed or economically uneavtive as per to the ILO definitions
define balance of payments
a record of all financial transactions between an economy and the rest of the world
define current account
a record of payment for the purchase and sale of goods/services as well as income and transfers
define current account deficits
when net external trade and income is negative leading to a net outflow of demand from the circular flow
define current account surplus
when the net external trade and income is positive leading to net injection into the circular flow
define aggregate demand
the total amount of goods and services demanded in the economy at a given time and price level
define aggregate supply
total planned output of goods and servives in an economy at a given time and price level
define consumption
total planned household spending
define disposable income
the income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments
animal spirits
the level of confidence of business owners
average propensity to consume
the proprtion of income that households devote to consumption
define gross investment
total investment calculated by adding new investment to replacement investment
define investment
spending by busininessses on capital goods, which leads to the creation of real goods
net trade
imporst minus exports
exports
goods/services sold to foreigners that brimg income into the country
define imports
goods/services bought from foreigners thattakes income out of the country
define net investment
investment adjusted for depreciation; gross investment minus depreciation
wealth
a stock of assets
define income
define national income
the total income earned by all factors of production in an economy at a given time frame
define GDP per capita
national income per head of population, used a s a measurment for standard of living (total GDP/population)
define the balance of trade
the difference between the value of a country’s exports and imports of goods and servives combined
define Long run aggreagte supply
the tottal output an economy can produce when operating at full output
define short run aggregate supply
aggregate supply when at least one factor of production is fixed
define injections
variables in an economy that add to the circular flow of income. They include: investment(I), goverment spending (G) and exports (X)
define withdrawals
variables in an economy that remove money flows from the circular flow of income. Saving (S), Imports(I), taxes(T)
marginal propensity to save
the proportion of additional income that is saved
marginal propensity to import
the propertion of additional income that is spent on imports
define marginal propensity to tax
the proprtion of additional income that is taxed
define marginal propensity to consume
the proprtion of additional income that is sepnt on the goods in the economy (consumed)
define marginal propensity to withdraw
the proprtion of additional income that is withdrawn from the economy (saved, taxed or spent on imports)