Definitions - Macro

Question 1

Macro Economics

Answer 1

Study of behaviour of an economy as a whole

Question 2

Micro Economics

Answer 2

Study of behaviour of parts of the economy

Question 3

Unemployment

Answer 3

A situation where those who are able and willing to work are unable to find a job

Question 4

Economically inactive

Answer 4

Those of working age who are neither employed nor unemployed

Question 5

Gross Domestic Product

Answer 5

The value of output produced by domestic based resources per year

Question 6

Economic Growth

Answer 6

rate of increase in national output per year

Question 7

sustainable development

Answer 7

development which meets the needs of the present generation without compromising the needs of future generations

Question 8

inflation

Answer 8

A general and persistent rise in the price level

Question 9

Retail Price Index (RPI)

Answer 9

Weighted average of the retail price level at a point in time (expressed as an index number)

Question 10

Consumer Price Index (CPI)

Answer 10

An index number measuring a weighted average for the price of consumer goods and services at a point in time

Question 11

Balance of Payments Current Account

Answer 11

A record of money flows going into and out of a country

Question 12

Investment income

Answer 12

Earnings from ownership of assets

Question 13

Circular flow of income

Answer 13

model which shows the movement of spending and wages throughout an economy

Question 14

injection

Answer 14

Additions of extra spending into the circular flow of income

Question 15

Withdrawal/leakage

Answer 15

withdrawals of possible spending from the circular flow of income

Question 16

Multiplier effect

Answer 16

The process by which any change in one of the components of AD results in a greater final change in real GDP

Question 17

Aggregate demand

Answer 17

the total demand for goods and services produced in an economy at a given price level over a specified period of time

Question 18

Aggregate supply

Answer 18

The total amount that producers in an economy are willing and able to supply at a given price level over a specified period of time.

Question 19

Consumption

Answer 19

spending by households on consumer goods

Question 20

Investment

Answer 20

Spending by firms on capital goods

Question 21

Government spending

Answer 21

spending by central and local government on goods and services

Question 22

Fiscal Policy

Answer 22

A governments decisions on taxation and government spending to influence AD and to achieve macro economic goals. Can involve the use of automatic stabilisers

Question 23

Monetary Policy

Answer 23

A government’s decisions on exchange rates, interested and the supply of money to influence AD and achieve macro economic goals.

Question 24

Supply-side Policy

Answer 24

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