Econ 101 Flashcards
1
Q
National Income
A
Total income of economy / value of aggregate output
2
Q
National output
A
Aggregate output / Real GDP
3
Q
Nominal
A
In terms of current prices (not accounted for changes in price level)
4
Q
National / Government Debt
A
Total amount owed by government to all creditors
5
Q
Contractionary Fiscal Policy
A
- pursued during inflation
- decrease in Gov. Spending
- increase in taxes
6
Q
Contractionary monetary policy
A
- during inflation
- increased interest rates
- intended to lower investment & consumption spending
7
Q
Corporate income tax
A
Tax on profits of corporations
8
Q
Corporations
A
Businesses that are legally separated from its owners
9
Q
Indebtedness
A
Degree of debt
10
Q
Allocative efficiency
A
- allocation of resources producing a
- combination & quantity of
- goods/services
- most preferred by consumers
11
Q
Absolute poverty
A
- inability to afford basic standard of G&S
- unchanging over time
- below poverty line
12
Q
Actual Growth
A
- growth from reducing unemployment
- improving efficiency of resource allocation
- pt inside PPC to pt on PPC
13
Q
Aggregate demand
A
- total quantity of G&S
- buyers are willing to purchase
- at different price levels
- over a given time period
14
Q
Aggregate supply
A
- total quantity of G&S produced
- at various price levels
- over given time period
15
Q
Automatic Stabilisers
A
- automatically/ w/o gov. intervention
- stabilise economy
- reducing SR business cycle fluctuations
(Progressive taxes & unemployment benefits)
16
Q
Budget deficit
A
- gov. Tax revenue < gov. Expenditures
- over time period
17
Q
Budget surplus
A
- tax revenue > gov. Expenditure
- over time period
18
Q
____ confidence
A
- degree of optimism
- amongst __
- in relation to future performance of economy
19
Q
Business cycle
A
- fluctuations in growth of RGDP
- periods of expansion & contraction
20
Q
Capital
A
- FOP
- resources that produce future stream of benefits
- natural, human, physical, financial
21
Q
Commercial Bank
A
- financial institution
- hold deposits for users
- makes loans to users
- to transfer funds for users
22
Q
Consumer price index (CPI)
A
- measure of cost of living
- for typical household
- compares value of a basket of G&S between years
- inflation measured at % change in basket value
23
Q
consumer surplus
A
- difference between highest price consumers willing to pay for G&S vs price actually paid
- area under demand curve & above price level paid
24
Q
Consumption
A
- spending of households on G&S
- exclu. Housing
25
Cost-push inflation
- inflation caused by
- fall in AS
- usually from increase in COP
- leftward AS shift
26
Crowding out
- impacts of gov. Spending from borrowing / expansionary fiscal policy
- increased interest rates
- reduce investment spending
- decreasing RGDP
27
Cyclical unemployment
- unemployment due to contractions of business cycle
- from decreased AD
- demand-deficient unemployment
28
Debt servicing
- payment to repay loan + interest
29
deflation
- sustained decrease in average price level
30
Demand management
- policies targeting demand side of economy
- influencing AD
- to achieve economic objectives
31
Demand-pull inflation
- inflation caused by increased AD
- rightward shift of AD
32
disinflation
- fall in the rate of inflation from prior year
- inflation rate is +ve, but reduced
33
Deferred consumption
- consumers postpone spending
- when expecting future price levels to fall
34
Deregulation
- policies reducing gov. Regulation
- in private sector
- belief that gov. Regulation creates inefficiency
35
Direct taxes
- taxes paid directly to gov.
- inclu. Personal income taxes, corporate income taxes, wealth taxes
36
Distribution of income
- proportion of an economy’s total income
- that different groups in population receive
37
Economic growth
- increases in RGDP over time
38
Economic Wellbeing
- levels of prosperity,
- economic satisfaction
- standards of living
39
Economic Inequality
- degree of different group’s ability to meet economic needs
- resulting from differences in income / wealth
40
Entrepreneurship
- FOP
- organises other FOP
- takes on risks and profits of firm
41
Equity
- state of being fair / just
42
Expansionary fiscal policy
- fiscal policy pursued during contraction
- increased gov. Spending
- decreased taxes
43
Expansionary monetary policy
- monetary policy pursued during contraction
- decreased interest rates
- intended to increase spending / demand
44
Expenditure approach
- measuring GDP through spending on all final G&S
- C+I+G+(X-M)
45
Fiscal policy
- government changing it’s leakages & injections on economy
- (taxes & expenditures)
- to influence AD
46
Equality
- state of being equal / the same
47
Frictional Unemployment
- workers are in-between jobs
- short-term
- waiting for new job to start
48
Full employment / potential output
- max use of resources (PPC)
- LRAS
- unemployment = natural rate of unemploy.
49
Globalisation
- economic integration on a global scale
- interconnectedness with the world
50
Happy planet index
- alternative to measure national income
- including environmental, inequalities, life expectancy
51
Output approach
- value of final value of G&S
- study the performance of each sector
52
Income approach
- method to calc. GDP
- adding income of all FOP
- income shares of all FOP
53
Indirect taxes
- taxes on expenditure of G&S
- taxes are paid by the consumer to firm then gov
54
Inflation
- sustained increased in average price level
55
Inflationary gap
- GDP > potential GDP
- AD = SRAS, when SRAS > LRAS
56
Keynesian AS
- draw diagram
- RGDP & price level shows that
- prices and wages are inflexible downward
57
Labour
- FOP w/ physical, mental, contribution to production of G&S
58
Land
- FOP w/ natural resources
- land itself
- resources from the land
59
Long run (marco)
- prices of FOP change with price level
60
Market based supply side policy
- policy promoting supply of economy
- to increase LRAS (rightward shift)
- long-term economic growth
- incentives, labour market reforms, competition
61
Monetary policy
- policies performed by central bank
- aimed at changing interest rates
- to influence AD
62
Money
- an acceptable payment for G&S
63
Marginal tax rate
- tax rate on additional income
- tax applying to highest tax bracket
- personal income
64
Minimum reserve requirement
- fraction of total deposits commercial banks must keep and not lend
65
Minimum lending rate
- interest rate charged by central bank when lending funds to commercial banks
66
Monetarist / new classical
- importance of price mechanism in determining economic outcomes
- competitive market equilibrium
- economy trends to full employment
67
Minimum income standard
- measure poverty by finding which G&S are essential
- to determine poverty line
68
Multidimensional poverty index (MPI)
- indicator including poverty of
- health, education, and living standards
69
Money creation
- process of commercial banks creating new money when they make loans
70
Natural rate of unemployment
- unemployment when economy is at LRAS
- sum of structural, frictional, seasonal
71
Personal income taxes
Taxes paid by households on all forms of income
72
Opportunity cost
Value of the next best alternative that was sacrifice for a decision
73
Poverty
Inability to afford adequate standard of G&S
74
Poverty line
Income level that just ensures a household is able to meet its needs
75
Poverty cycle
Poverty is transmitted from generation to next
Low incomes beget low capital, hence low income for future
76
Price mechanism
- Prices determined by demand and supply
- free & competitive market
- interactions determine allocation of resources
77
Privatisation
Transfer of ownership from public/gov. Sector to private owernship
78
Quintiles
- lowest income quintile is 20% w lowest incorm
79
Recession
- economic contraction of neg RGDP growth
- 6 months or more
80
Deflationary gap
- real GDP < potential GDP
- unemployment > natural rate unempl.
- SRAS < LRAS
81
Redistribution of income
Changing the distribution of income, to a new distribution
82
Relative poverty
- inability to afford adequate standard of G&S
- standards is relative & changes
83
Quantitive easing
- expansionary monetary policy
- done by central banks
- increase money supply
- facilitate commercial bank lending
- by buying bonds on a large lvl
84
Regressive taxation
- taxation when as income increases
- portion of income paid as taxes decreases
85
Seasonal unemployment
- occurs when demand for labour in industries changes seasonally
86
Structural unemployment
- occurs due to technological changes in the demands of labour skills
- changes in geographical location labour demand
87
Supply of money
- amount of money in circulation
- determined by central bank
- determines equilibrium rate of interest
88
Supply-side policies
- policies focusing on AS
- shifting LRAS / potential output rightward
- not attempting to stabilise economy
89
Sustainable debt
- level of debt where gov. Revenue is able to comfortably meet debt obligations
90
Unemployment
- number of unemployed people
- of working age
- actively looking for work
91
Wealth taxes
- taxes on ownership of wealth
- property taxes, inheritance taxes
92
Weighted price index
- weights the G&S of the basket according to their importance
93
Interventionist supply-side policies
- based on gov. Intervention
- influence LRAS rightward
- achieve long term economic growth
- investments in education, infrastructure etc
94
Incentive related policies
- policies reducing taxes (income, business tax)
- belief tax cuts will incentive increased AS
95
Progressive taxation
- taxation when income increases
- fraction of income tax increases
96
Universal basic income
- provide everyone in country
- sum of money/income received
- additional to any other income
- to reduce poverty
97
Interest
- an additional payment per unit of time
- given to lenders for
- borrowed money
98
Transfer payments
- payments from gov. To ‘vulnerable groups’
- to redistribute income
- from those who work and pay taxes
99
Free Trade Definition
(Get from photos)
100
paper 2: define economic growth
- increases in total real output produced by an economy (real GDP) over time
101
paper 2: define economic development
- broad rises in standards
of living and well-being of a population
- increasing income levels, provision of and access to basic goods and services
- and reducing poverty, income
inequalities and unemployment
102
