definitions (macroeconomics)

Question 1

inclusive economic growth

Answer 1

rate of economic growth that is broad-based and provides employment opportunities to the majority of the population, and does not worsen income disparity between higher-income and lower-income groups

Question 2

sustainable economic growth

Answer 2

rate of economic growth that meets the needs of the present economy without creating problems for future generations, including environmental degradation and depletion of resources

Question 3

full employment / low unemployment rate

Answer 3

refers to a situation in which all available resources in an economy are being used, and there is no significant surplus of unemployed workers

Question 4

unemployment

Answer 4

refers to a situation in which individuals who are willing and able to work and are actively seeking for a job do not have a job

Question 5

labour force

Answer 5

total number of people in the workforce aged 15 and above, who are willing and able to work and actively seeking for a job, including both employed and unemployed persons

Question 6

demand-deficient unemployment

Answer 6

occurs when there is a lack of aggregate demand in an economy to maintain full employment

Question 7

structural unemployment

Answer 7

mismatch of skills between workforce and jobs available in an economy, resulting in individuals having no jobs

Question 8

price stability

Answer 8

low and stable inflation rates

Question 9

demand-pull inflation

Answer 9

excessive demand in the economy resulting in a depletion of factors of production, hence resulting in an overheating economy and increased general price levels

Question 10

Balance of Trade (BOT)

Answer 10

a record between the monetary value of a country’s imports and exports

Question 11

fiscal policy

Answer 11

a macroeconomic policy that alters government expenditure and/or tax levels to influence the economy

Question 12

monetary policy

Answer 12

is a macroeconomic strategy that involves regulating the money supply, adjusting interest rates and/or managing exchange rates to influence the economy

Question 13

interest-rate centred monetary policy

Answer 13

refers to the policy where the central bank of a country increases/decreases money supply to decrease/increase the interest rate in a country

Question 14

exchange-rate centred monetary policy

Answer 14

• involves appreciation/depreciation of the domestic currency
• achieved through central bank buying back foreign currencies and selling its domestic currency in the foreign exchange market (FOREX market)

Question 15

marshall-lerner condition

Answer 15

abs( PEDx + PEDm ) > 1

Question 16

wage subsidies

Answer 16

policies where the government provides funds to firms to off-set some of their labour costs (i.e. cofounding the wages of workers)