Econ Flashcards
current government expenditure
money spent by the government on the day to day running of the government.
Disrectionary government expenditure
money spent by the government over which it has choice and it is easy to change how much it spends
GNP at market price
Gross national product at market prices = GDP + income earned abroad - income paid to foreigners
GVA
Gross value added = GDP - indirect taxes - subsidies
Irrational behaviour
A situation in which a decision maker makes a decision that is not influenced by the desire to maximise there own self interest
Marginal social benefit
The total extra benefits of producing an extra unit of a product = marginal private cost + marginal external cost.
composite demand
when goods and services have more than one use so that an increase in demand for one product will lead to a reduction in the supply of the other product
Giffen good
A product with a demand curve that is upward sloping from left to right because of the effect of a price increase reducing real income means that consumers buy fewer other products in order to buy the more expensive ones so that the income effect is greater than the effect of higher prices on swapping between products.
Market segment
groups of consumers within a market who have similar wants and desires.
company
A business that is owned by shareholders
going public
converting the ownership of a business to become a public limited company
Multi-national corporation
Large conglomerates, often with a big mix of products, which operate in many countries
Mutual organisation
a business organisation that does not have owners in the normal sense of the word owners. It has members who collectively own the business and are also its customers.
Ordinary shares
Part ownership of a limited liability business that has voting rights which entitles its holder to dividends
Partnership
A form of business ownership that involves between two and twenty people owning and running the business. They have unlimited liability .
Private limited company
a firm who’s financial liabilities are limited to the amount of money put up by shareholders. One person alone can form one and its shares cannot be sold to the public.
Public limited company
a limited company who’s shares can be bought and sold by the public and other firms and can use the abbreviation plc.
Share
A part ownership of a business that has limited liability.
Shareholder
people or businesses who have bought shares in a company which gives them part ownership of the company and a percentage of any profits
Sole trader
A form of business ownership that is owned and run by one person.
Average family
a theoretical idea of the characteristics of the typical household in the economy, which is used to help measure the rate of inflation.
Basket of goods
The combination of goods and services that is used to measure the rate of inflation in an economy.
Benign deflation
A rate of price deflation that is low enough not to be considered harmful to the economy or that is only temporary.
Boom
A phase of the economic cycle where the economy is at its peak level of GDP. The economy is at or near full capacity
Claimant count
a measure of unemployment that includes only those people that are receiving unemployment benefits because they are available for work and actively seeking work.
cost push inflation
where an increase in the general level of prices is caused by the costs of businesses going up, forcing firms to increase their prices.
CPI
The consumer price index - A way of measuring the rate of inflation which measures changes in prices of a basket of goods.
HDI
Human development index. This is a way that measures standard of living that takes into account a wider set of factors.
hysteresis
A situation where low, high and extended period of unemployment alters the skills that people have so that they become less employable over time, increasing the natural rate of unemployment
ILO
International labour organisation. This is a body that sets the standard for how market research can be used to record the level of unemployment in an economy
index of sustainable welfare
this is a way of measuring the standard of living that takes into account a wider set of factors than the HDI
long run Philips curve
this is a vertical line that represents the rate of unemployment that is consistent with the rate of d
inflation
malign deflation
A rate of deflation that is considered to be bad for the economy as a whole because it causes even more deflation
money income
the nominal value of a person of an economies income
natural rate of unemployment
the rate of unemployment when the labour market is in equilibrium
negative output gap
when the economy is growing more slowly than the trend rate of growth
participation rates
the % of the population that are active in the labour market
real national output
the value of national income, which is the value of all output in the economy. which has been adjusted to take into account the changes in price
real wage unemployment
the people who are out of a job because the actual real wage is higher than the equilibrium real wage rate
current account
the difference between the flows of money into a country and the flows of money out of a country for trade in goods, services and income abroad. = visible balance + invisible balance + primary income + secondary income
Economic cycle
regular changes in the level of economic activity, moving from booms to recessions and back again
endogenous
an influence on the performance of an economy that comes from within the economy
equity
A judgment about the fairness of a situation
exogenous
An influence on then performance of an economy that comes from outside of the economy
frictional unemployment
the employment that exists due to. people being in the process of moving between jobs
GDP at market prices
the value of all goods and services produced in an economy plus taxes, less subsidies in imports
GDP per capita at purchasing power party
GDP converted into international dollars using purchasing power parity exchange rates and divided by total population.
government dept
the total value of all borrowing made by the government that has not yet been paid back.
Liquidity trap
A situation where interest rates are so low that further cutting interest rates no longer have any affect on the real economy
Market based policies
government actions that are designed to improve markets so they can more effectively solve economic issues themselves
monetary based control
attempting to limit the amount of liquid currency
monetary policy committee
a group based in the bank of England who’s function is to set bank rate
monetary transmission mechanism
the process by which changes in monetary policy affect the real economy
narrow money
something that takes a form that means it can be used as a medium of exchange
national insurance contributions
A tax that is paid and hypothecated for use as welfare benefits
near money
assets than can be easily converted into cash
open market contributions
the process of buying and selling government dept with the intention of expanding or contracting the money supply
proportional taxation
whatever you income/wealth you pay the same percentage of your wealth/income
PSNCR
Public sector net credit requirement - the official measure of the government budget deficit
QUANGO
quasi-autonomous non government organisation - these are government funded bodies, that are not controlled by the government, set up to regulate specific firms or industries
quantitive easing
where the central bank deliberatly increases the supply of money in an economy
regressive taxation
where the percentage of your income paid in tax decreases as income increases
sight deposit accounts
a bank account where the money can be withdrawn with no notice
stamp duty
a tax on the sale of houses
standard of deferred payment
a characteristic of money - meaning that something is a widely accepted way to value dept and so allowing goods and services to be acquired now and paid for in the future.
trickle down effect
the idea that wealth created for the richest people is saved or spent and so either creates demand for other businesses or provides the funding for investment that allows the rest of society to indiretly benefit from that wealth
unit of account
A characteristic of money - it is a measure of money that is used to value any economic item
velocity of circulation of money
the number of times that the supply of money moves around in an economy in a given period of time
business rates
a tax paid to the local council by businesses based on the value of the premises
certain taxation
taxes that are predicable so that you can plan for how you are going to pay them
incidence of taxation
the extent to which a tax is paid by consumers compared to being paid by producers
national insurance contributions (NICs)
a tax paid on the money that you earn and paid by the businesses that employ you. Sole traders also have to pay it.
nationalisation
where the government buys an industry or other assets from the private sector in order to achieve its economic objectives
regulatory capture
where a government body that was formed to protect consumers ends up protecting the firm instead
VAT
A tax on the value of things that are sold, it is paid by the businesses to the government
abnormal profit
the profit of a business that is more than the opportunity cost to them of staying in the industry
accounting profit
the profit published by businesses for tax purposes, calculated by subtracting total costs from total revenues
