Definitions - Macro Flashcards
Most of the definitions needed for unit 2 - Macro economics
Macro Economics
Study of behaviour of an economy as a whole
Micro Economics
Study of behaviour of parts of the economy
Unemployment
A situation where those who are able and willing to work are unable to find a job
Economically inactive
Those of working age who are neither employed nor unemployed
Gross Domestic Product
The value of output produced by domestic based resources per year
Economic Growth
rate of increase in national output per year
sustainable development
development which meets the needs of the present generation without compromising the needs of future generations
inflation
A general and persistent rise in the price level
Retail Price Index (RPI)
Weighted average of the retail price level at a point in time (expressed as an index number)
Consumer Price Index (CPI)
An index number measuring a weighted average for the price of consumer goods and services at a point in time
Balance of Payments Current Account
A record of money flows going into and out of a country
Investment income
Earnings from ownership of assets
Circular flow of income
model which shows the movement of spending and wages throughout an economy
injection
Additions of extra spending into the circular flow of income
Withdrawal/leakage
withdrawals of possible spending from the circular flow of income
Multiplier effect
The process by which any change in one of the components of AD results in a greater final change in real GDP
Aggregate demand
the total demand for goods and services produced in an economy at a given price level over a specified period of time
Aggregate supply
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.
Consumption
spending by households on consumer goods
Investment
Spending by firms on capital goods
Government spending
spending by central and local government on goods and services
Fiscal Policy
A governments decisions on taxation and government spending to influence AD and to achieve macro economic goals. Can involve the use of automatic stabilisers
Monetary Policy
A government’s decisions on exchange rates, interested and the supply of money to influence AD and achieve macro economic goals.
Supply-side Policy
Policies designed to increase aggregate supply by improving the efficiency of labour and product markets.
