Economic Performance Deffinitions Flashcards
Activity rate/ participation rate
Proportion of the population of working age in a job or actively seeking work.
Balance of payments
Record of a country’s trading and financial transactions with the rest of the world.
Balance of payments equilibrium
Occurs where the balance of payments is relatively balanced over a few years.
Balance of trades
Difference between the monetary value of an economy’s exports and their imports.
Balance of trade deficits
When the monetary value of an economy’s imports exceed their exports.
Balance of trades in goods
Part of the current account comparing the difference in the monetary value of an economy’s exported goods and their imported goods.
Balance of trades in services
Part of the current account comparing the difference in the monetary value of an economy’s exported services and their imported services.
Balance of trade surplus
When the monetary value of an economy’s exports exceed their imports.
Closed economy
A country with no international trade.
Cost push inflation
A rise in the price level due to an increase in costs of production.
Current account deficit
When currency outflows in the current account exceed currency inflows.
Current account balance of payments
Measures monetary flow into/out of an economy based on balance of trade in goods and services, primary income and secondary income.
Cyclical unemployment (demand-deficient unemployment)
Unemployment caused by a lack of aggregate demand.
Deflation
The persistent fall in the average price level.
Demand pull inflation
A rise in the price level due to an increase in aggregate demand.
Disinflation
A fall in the rate of inflation
Economic cycle
Upswings and downswings in aggregate economic activity over a period of time.
Economic performance
Success and/or failure in meeting economic objectives.
Economic recovery
Short run economic growth after a recession
Export led growth
Economic growth arising from and increase in exports as a component of aggregate demand, in the short run.
Frictional unemployment
Unemployment caused by transferring between two jobs.
Harrod-Domar model
Model illustrating the importance of savings and investment as key factors of economic growth.
Import cost inflation
A rise in the price level due to an increase in the price of imported resources.
Inflation
The persistent rise in the average price level.
Investment
Increase in the capital stock of an economy.
Involuntary unemployment
When there are no jobs available at the market wage rate for those willing and able to work.
Long run economic growth
An increase in the productive potential of the economy.
Long run Phillips curve
Vertical curve that depicts the role of expectations in the inflationary process.
Money illusion
When individuals confuse nominal and real values when making economic decisions.
Negative output gap
How much lower actual real output is than the trend output level.
Net investment income
Difference between income earned by UK assets located abroad
and income earned by foreigner owned assets located in the UK.
Net inward migration
When the number of migrants entering a country exceeds the number exiting the country.
Net outward migration
When the number of migrants entering a country is less than the number exiting the country.
NAIRU
Non-accelerating inflation rate of unemployment (NAIRU): The rate of unemployment consistent with a country experiencing a stable rate of cost & price inflation.
Open economy
A country with international trade
Output gap
The difference between actual and real output and the trend output level
Phillips curve
Curve that depicts the relationship between inflation and unemployment.
Policy conflict
Occurs when two policy objectives interfere and thus cannot be met
simultaneously.
Recession
A fall in real GDP for 2 consecutive quarters
Seasonable fluctuation
Variations in economic activity caused by seasonal changes to the economy.
Seasonable unemployment
Unemployment caused by the changes in the seasons of the year.
Speculation
When uncertainty of the future impacts economic transactions.
Stagflation
High inflation and high unemployment
Structural unemployment
Unemployment caused by the decline in certain industries.
Transfers
Payments between countries, with which nothing of economic value is given in return.
Unemployment rate
The unemployment level as a proportion of the labour force.
Voluntary unemployment
When workers choose to remain unemployed.
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Wage cost inflation
A rising price level caused by an increase in wages.
