Definitions Required Flashcards
Actual Economic growth
An increase in real GDP.
Aggregate Demand
Total spending on domestic output at a given time.
Aggregate Supply
The total value of output all producers are willing and able to supply at a given time and price level.
Automatic Stabilisers
Forms of government spending and taxation that dampen down the affects of fluctuations without government policy changes.
Balance of Payments
A record of a countries trade and investment with other countries.
Capacity Utilisation
Measures how much of an economies productive potential is being used.
Claimant Count
The number of people claiming unemployment benefits.
Circular Flow of Income
The flow of products/services between firms/producers and households/consumers.
Corporation Tax
A tax levied on a firms profits.
Cost Push Inflation
Increases in the average price levels as a result of increases in the cost of production.
Current Account Balance
A records of a countries trade in goods, trade in services, income and transfers.
Cyclical Unemployment
Unemployment resulting from the lack of aggregate demand.
Demand Pull Inflation
Increases in the average price level resulting from excessive increases in aggregate demand.
Deregulation
The removal of laws and regulation that restrict competition.
Direct Taxes
Taxes on income and wealth of the people and firms.
Disposable Income
Income after the deduction of direct taxes and the addition of state benefits.
Economic Growth
The growth in the value of output in the economy.
Exchange Rate
The price of one countries currency in terms of another.
Expansionary Monetary Policy
Changes in the money supply (increase), rate of interest (cut) and exchange rate (lower) which are designed to stimulate aggregate demand.
Fiscal Drag
The reduction in disposable income that occurs when tax bands are not in line with inflation.
Fiscal Policy
A governments policy in regards to taxation, public spending. It can be loose/expansionary or tight/deflationary.
Frictional Unemployment
Unemployment arising when people are between jobs.
GDP
The total value of goods and services produced by a country based in an economy.
Hot Money Flows
Flows of short term finance that moves around the world as a result of changing interest rates and exchange rates.
Hyperinflation
A very high rate of inflation which causes huge economic problems.
Hysteresis
Unemployment generating unemployment by reducing the confidence and level of skills of the unemployed.
Indirect Taxes
Taxes on the consumption of goods/services.
Injections
Spending domestic output from inside the circular flow, government spending investment and exports.
Marginal Propensity to Consume
The proportion of any addition income which is spent rather than saved.
Marginal Propensity to Save
The proportion of any additional income which is saved rather than spent.
Monetary Policy
Changes in the money supply, rate of interest and exchange rate.
Multiplier
An increase in the levels of injections in the circular flow of which increases aggregate demand.
Rate of Unemployment
The number of people who are willing, able and registered to work, but cannot find work despite an active search expressed as a percentage.
Rate of Inflation
A steady and continuous rise in average price levels expressed as a percentage.
Real GDP
GDP adjusted to inflation.
Structural Unemployment
A mismatch in the demand for skills as a result int he changing industry pattern.
Supply-Side Policies
Policies design to increase the economies long term economic growth.
Tariff
A tax on imports
Transfer Payments
Money transferred from one group to another in return for providing a good/service.
Unemployment Trap
People who are better of staying on unemployment benefits rater then getting a job.
Withdrawals
Parts of income which are not passes on in the circular flow of income, leakages, savings, tax and imports.
Leakages
Taxation, Imports and Savings
