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Economics > Econ 101 > Flashcards

Econ 101 Flashcards

1
Q

National Income

A

Total income of economy / value of aggregate output

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2
Q

National output

A

Aggregate output / Real GDP

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3
Q

Nominal

A

In terms of current prices (not accounted for changes in price level)

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4
Q

National / Government Debt

A

Total amount owed by government to all creditors

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5
Q

Contractionary Fiscal Policy

A
  • pursued during inflation
  • decrease in Gov. Spending
  • increase in taxes
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6
Q

Contractionary monetary policy

A
  • during inflation
  • increased interest rates
  • intended to lower investment & consumption spending
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7
Q

Corporate income tax

A

Tax on profits of corporations

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8
Q

Corporations

A

Businesses that are legally separated from its owners

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9
Q

Indebtedness

A

Degree of debt

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10
Q

Allocative efficiency

A
  • allocation of resources producing a
  • combination & quantity of
  • goods/services
  • most preferred by consumers
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11
Q

Absolute poverty

A
  • inability to afford basic standard of G&S
  • unchanging over time
  • below poverty line
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12
Q

Actual Growth

A
  • growth from reducing unemployment
  • improving efficiency of resource allocation
  • pt inside PPC to pt on PPC
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13
Q

Aggregate demand

A
  • total quantity of G&S
  • buyers are willing to purchase
  • at different price levels
  • over a given time period
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14
Q

Aggregate supply

A
  • total quantity of G&S produced
  • at various price levels
  • over given time period
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15
Q

Automatic Stabilisers

A
  • automatically/ w/o gov. intervention
  • stabilise economy
  • reducing SR business cycle fluctuations
    (Progressive taxes & unemployment benefits)
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16
Q

Budget deficit

A
  • gov. Tax revenue < gov. Expenditures
  • over time period
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17
Q

Budget surplus

A
  • tax revenue > gov. Expenditure
  • over time period
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18
Q

____ confidence

A
  • degree of optimism
  • amongst __
  • in relation to future performance of economy
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19
Q

Business cycle

A
  • fluctuations in growth of RGDP
  • periods of expansion & contraction
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20
Q

Capital

A
  • FOP
  • resources that produce future stream of benefits
  • natural, human, physical, financial
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21
Q

Commercial Bank

A
  • financial institution
  • hold deposits for users
  • makes loans to users
  • to transfer funds for users
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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
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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
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24
Q

Consumption

A
  • spending of households on G&S
  • exclu. Housing
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25
Q

Cost-push inflation

A
  • inflation caused by
  • fall in AS
  • usually from increase in COP
  • leftward AS shift
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26
Q

Crowding out

A
  • impacts of gov. Spending from borrowing / expansionary fiscal policy
  • increased interest rates
  • reduce investment spending
  • decreasing RGDP
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27
Q

Cyclical unemployment

A
  • unemployment due to contractions of business cycle
  • from decreased AD
  • demand-deficient unemployment
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28
Q

Debt servicing

A
  • payment to repay loan + interest
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29
Q

deflation

A
  • sustained decrease in average price level
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30
Q

Demand management

A
  • policies targeting demand side of economy
  • influencing AD
  • to achieve economic objectives
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31
Q

Demand-pull inflation

A
  • inflation caused by increased AD
  • rightward shift of AD
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32
Q

disinflation

A
  • fall in the rate of inflation from prior year
  • inflation rate is +ve, but reduced
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33
Q

Deferred consumption

A
  • consumers postpone spending
  • when expecting future price levels to fall
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34
Q

Deregulation

A
  • policies reducing gov. Regulation
  • in private sector
  • belief that gov. Regulation creates inefficiency
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35
Q

Direct taxes

A
  • taxes paid directly to gov.
  • inclu. Personal income taxes, corporate income taxes, wealth taxes
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36
Q

Distribution of income

A
  • proportion of an economy’s total income
  • that different groups in population receive
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37
Q

Economic growth

A
  • increases in RGDP over time
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38
Q

Economic Wellbeing

A
  • levels of prosperity,
  • economic satisfaction
  • standards of living
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39
Q

Economic Inequality

A
  • degree of different group’s ability to meet economic needs
  • resulting from differences in income / wealth
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40
Q

Entrepreneurship

A
  • FOP
  • organises other FOP
  • takes on risks and profits of firm
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41
Q

Equity

A
  • state of being fair / just
42
Q

Expansionary fiscal policy

A
  • fiscal policy pursued during contraction
  • increased gov. Spending
  • decreased taxes
43
Q

Expansionary monetary policy

A
  • monetary policy pursued during contraction
  • decreased interest rates
  • intended to increase spending / demand
44
Q

Expenditure approach

A
  • measuring GDP through spending on all final G&S
  • C+I+G+(X-M)
45
Q

Fiscal policy

A
  • government changing it’s leakages & injections on economy
  • (taxes & expenditures)
  • to influence AD
46
Q

Equality

A
  • state of being equal / the same
47
Q

Frictional Unemployment

A
  • workers are in-between jobs
  • short-term
  • waiting for new job to start
48
Q

Full employment / potential output

A
  • max use of resources (PPC)
  • LRAS
  • unemployment = natural rate of unemploy.
49
Q

Globalisation

A
  • economic integration on a global scale
  • interconnectedness with the world
50
Q

Happy planet index

A
  • alternative to measure national income
  • including environmental, inequalities, life expectancy
51
Q

Output approach

A
  • value of final value of G&S
  • study the performance of each sector
52
Q

Income approach

A
  • method to calc. GDP
  • adding income of all FOP
  • income shares of all FOP
53
Q

Indirect taxes

A
  • taxes on expenditure of G&S
  • taxes are paid by the consumer to firm then gov
54
Q

Inflation

A
  • sustained increased in average price level
55
Q

Inflationary gap

A
  • GDP > potential GDP
  • AD = SRAS, when SRAS > LRAS
56
Q

Keynesian AS

A
  • draw diagram
  • RGDP & price level shows that
  • prices and wages are inflexible downward
57
Q

Labour

A
  • FOP w/ physical, mental, contribution to production of G&S
58
Q

Land

A
  • FOP w/ natural resources
  • land itself
  • resources from the land
59
Q

Long run (marco)

A
  • prices of FOP change with price level
60
Q

Market based supply side policy

A
  • policy promoting supply of economy
  • to increase LRAS (rightward shift)
  • long-term economic growth
  • incentives, labour market reforms, competition
61
Q

Monetary policy

A
  • policies performed by central bank
  • aimed at changing interest rates
  • to influence AD
62
Q

Money

A
  • an acceptable payment for G&S
63
Q

Marginal tax rate

A
  • tax rate on additional income
  • tax applying to highest tax bracket
  • personal income
64
Q

Minimum reserve requirement

A
  • fraction of total deposits commercial banks must keep and not lend
65
Q

Minimum lending rate

A
  • interest rate charged by central bank when lending funds to commercial banks
66
Q

Monetarist / new classical

A
  • importance of price mechanism in determining economic outcomes
  • competitive market equilibrium
  • economy trends to full employment
67
Q

Minimum income standard

A
  • measure poverty by finding which G&S are essential
  • to determine poverty line
68
Q

Multidimensional poverty index (MPI)

A
  • indicator including poverty of
  • health, education, and living standards
69
Q

Money creation

A
  • process of commercial banks creating new money when they make loans
70
Q

Natural rate of unemployment

A
  • unemployment when economy is at LRAS
  • sum of structural, frictional, seasonal
71
Q

Personal income taxes

A

Taxes paid by households on all forms of income

72
Q

Opportunity cost

A

Value of the next best alternative that was sacrifice for a decision

73
Q

Poverty

A

Inability to afford adequate standard of G&S

74
Q

Poverty line

A

Income level that just ensures a household is able to meet its needs

75
Q

Poverty cycle

A

Poverty is transmitted from generation to next
Low incomes beget low capital, hence low income for future

76
Q

Price mechanism

A
  • Prices determined by demand and supply
  • free & competitive market
  • interactions determine allocation of resources
77
Q

Privatisation

A

Transfer of ownership from public/gov. Sector to private owernship

78
Q

Quintiles

A
  • lowest income quintile is 20% w lowest incorm
79
Q

Recession

A
  • economic contraction of neg RGDP growth
  • 6 months or more
80
Q

Deflationary gap

A
  • real GDP < potential GDP
  • unemployment > natural rate unempl.
  • SRAS < LRAS
81
Q

Redistribution of income

A

Changing the distribution of income, to a new distribution

82
Q

Relative poverty

A
  • inability to afford adequate standard of G&S
  • standards is relative & changes
83
Q

Quantitive easing

A
  • expansionary monetary policy
  • done by central banks
  • increase money supply
  • facilitate commercial bank lending
  • by buying bonds on a large lvl
84
Q

Regressive taxation

A
  • taxation when as income increases
  • portion of income paid as taxes decreases
85
Q

Seasonal unemployment

A
  • occurs when demand for labour in industries changes seasonally
86
Q

Structural unemployment

A
  • occurs due to technological changes in the demands of labour skills
  • changes in geographical location labour demand
87
Q

Supply of money

A
  • amount of money in circulation
  • determined by central bank
  • determines equilibrium rate of interest
88
Q

Supply-side policies

A
  • policies focusing on AS
  • shifting LRAS / potential output rightward
  • not attempting to stabilise economy
89
Q

Sustainable debt

A
  • level of debt where gov. Revenue is able to comfortably meet debt obligations
90
Q

Unemployment

A
  • number of unemployed people
  • of working age
  • actively looking for work
91
Q

Wealth taxes

A
  • taxes on ownership of wealth
  • property taxes, inheritance taxes
92
Q

Weighted price index

A
  • weights the G&S of the basket according to their importance
93
Q

Interventionist supply-side policies

A
  • based on gov. Intervention
  • influence LRAS rightward
  • achieve long term economic growth
  • investments in education, infrastructure etc
94
Q

Incentive related policies

A
  • policies reducing taxes (income, business tax)
  • belief tax cuts will incentive increased AS
95
Q

Progressive taxation

A
  • taxation when income increases
  • fraction of income tax increases
96
Q

Universal basic income

A
  • provide everyone in country
  • sum of money/income received
  • additional to any other income
  • to reduce poverty
97
Q

Interest

A
  • an additional payment per unit of time
  • given to lenders for
  • borrowed money
98
Q

Transfer payments

A
  • payments from gov. To ‘vulnerable groups’
  • to redistribute income
  • from those who work and pay taxes
99
Q

Free Trade Definition

A

(Get from photos)

100
Q

paper 2: define economic growth

A
  • increases in total real output produced by an economy (real GDP) over time
101
Q

paper 2: define economic development

A
  • 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
Q
A

Economics (5 decks)

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