definitions theme 2 Flashcards
what is actual growth
economic growth measured by changes in real GDP
what’re animal spirits
the level of confidence of business owners
what is balance of payments
a record of all financial dealings over a period of time between economic agents of one country and another
what is budget
where the government lays out their spending and taxation plans
what is budget deficit/surplus
when the government spends more money than it receives
when the government receives more money than it spends
what is the circular flow
a model of the economy which shows the flow of goods and services, the factors of production and money around the economy
what is the claimant count
a measure of unemployment; the # of people receiving benefits for being unemployed
what is the CPI
official measure used to calculate the rate of inflation, using a weighted basket of goods
what is consumption
consumer spending on goods and services
what is the current account
a record of the payments for the purchase and sale of goods and services, as well as income and transfers
what is the current account deficit/surplus
when more money leaves the country than enters; the current account is negative
when more money enters the country than leaves; the current account is positive
what is cyclical unemployment
unemployment caused by a lack of AD (workers are laid off to cut costs)
what is deflation
a persistent fall in prices of goods and services
what is a deflationary and expansionary policy
deflationary: fiscal or monetary policy aimed to reduce AD
expansionary: fiscal or monetary policy aimed to increase AD
what is depreciation
the reduction in the value over time
what is a direct tax
taxes paid straight to the government by the individual taxpayer
what is disinflation
a reduction in the rate of inflation
what is economic growth
an increase in the long run productive potential in the economy; an increase in the amount of goods and services which are produced, measured by an increase in real GDP
what is fiscal policy
the use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance
what is frictional unemployment
unemployment caused when people move between jobs and enter the job market
what is GDP
the value of goods/services produced in a country over a given period of time
what is gdp per capita
total gdp / population
what is gross investment
investment both to replace old machinery that has depreciated and to create/buy new ones
what is GNI
gross national income is the value of goods/services produced by a country over a period of time + net overseas interest payments and dividends
what is GNP
gross national product is the value of goods and services produced by citizens of a country, living in the country or not
what is an indirect tax
tax where the person charged with paying the money to the government is able to pass on the cost to someone else
what is inflation
the general rise in the GPL of goods and services that erodes the purchasing power of money
what’re interventionist supply side policies
policies designed to correct market failure, where the government intervenes in the market
what is investment
spending by businesses on capital goods, leading to the creation of real/consumer goods
what is the long run
when all factors are variable
what’re market based supply side policies
policies designed to remove anything which prevents the free market system from working efficiently
what is monetary policy
attempts of the CB/regulatory authority to control the AD level by altering base interest rates or the amount of money in the economy
what is the Monetary Policy Committee (MPC)
economists who meet monthly to set the bank rate as well as other monetary instruments
what is national expenditure
the value of spending by households on goods/services
what is national income
the value of income paid by firms to households in return for land, labour capital and enterprise
what is national output
the value of the flow of goods and services from firms to households
what is net investment
gross investment - depreciation
what is nominal GDP
GDP that doesn’t take inflation into account; at current prices
what is an output gap
difference between the long term trend rate of growth and actual growth
what is PPP
Purchasing Power Parity measures the exchange rate of one country to another, that compared the costs of living in different countries through comparing a typical basket of goods
what is QE
when the central bank buys assets in exchange for money in an attempt to increase the money supply
what is real wage unemployment
unemployment caused when wages are set above the equilibrium wage rate
what is seasonal unemployment
unemployment caused when an industry only operates during certain times of the year
what is the short run
when at least 1 factor of production is fixed
what is structural unemployment
unemployment caused by the long-term decline of an industry
what’re supply side policies
government policies aimed at increasing the productive potential of the economy and shifting LRAS to the right
what is underemployment
those working part time, 0 hour contracts or on government training schemes but would rather work full time or those employed in areas under their skill level
what is value/volume of GDP
value: nominal values of GDP; at current prices
volume: real values of GDP; the size of the basket of goods
what is unemployment
those willing and able to work but cannot find work, and have actively sought work for the last 4 weeks
what is wealth
a stock of assets
