Economic Performance Deffinitions

Question 1

Activity rate/ participation rate

Answer 1

Proportion of the population of working age in a job or actively seeking work.

Question 2

Balance of payments

Answer 2

Record of a country’s trading and financial transactions with the rest of the world.

Question 3

Balance of payments equilibrium

Answer 3

Occurs where the balance of payments is relatively balanced over a few years.

Question 4

Balance of trades

Answer 4

​Difference between the monetary value of an economy’s exports and their imports.

Question 5

Balance of trade deficits

Answer 5

When the monetary value of an economy’s imports exceed their exports.

Question 6

Balance of trades in goods

Answer 6

Part of the current account comparing the difference in the monetary value of an economy’s exported goods and their imported goods.

Question 7

Balance of trades in services

Answer 7

Part of the current account comparing the difference in the monetary value of an economy’s exported services and their imported services.

Question 8

Balance of trade surplus

Answer 8

When the monetary value of an economy’s exports exceed their imports.

Question 9

Closed economy

Answer 9

​A country with no international trade.

Question 10

Cost push inflation

Answer 10

​A rise in the price level due to an increase in costs of production.

Question 11

Current account deficit

Answer 11

When currency outflows in the current account exceed currency inflows.

Question 12

Current account balance of payments

Answer 12

​Measures monetary flow into/out of an economy based on balance of trade in goods and services, primary income and secondary income.

Question 13

Cyclical unemployment (demand-deficient unemployment)

Answer 13

Unemployment caused by a lack of aggregate demand.

Question 14

Deflation

Answer 14

The persistent fall in the average price level.

Question 15

Demand pull inflation

Answer 15

A rise in the price level due to an increase in aggregate demand.

Question 16

Disinflation

Answer 16

A fall in the rate of inflation

Question 17

Economic cycle

Answer 17

Upswings and downswings in aggregate economic activity over a period of time.

Question 18

Economic performance

Answer 18

​Success and/or failure in meeting economic objectives.

Question 19

Economic recovery

Answer 19

Short run economic growth after a recession

Question 20

Export led growth

Answer 20

​Economic growth arising from and increase in exports as a component of aggregate demand, in the short run.

Question 21

Frictional unemployment

Answer 21

Unemployment caused by transferring between two jobs.

Question 22

Harrod-Domar model

Answer 22

​Model illustrating the importance of savings and investment as key factors of economic growth.

Question 23

Import cost inflation

Answer 23

​A rise in the price level due to an increase in the price of imported resources.

Question 24

Inflation

Answer 24

​The persistent rise in the average price level.

Question 25

Investment

Answer 25

​Increase in the capital stock of an economy.

Question 26

Involuntary unemployment

Answer 26

When there are no jobs available at the market wage rate for those willing and able to work.

Question 27

Long run economic growth

Answer 27

​An increase in the productive potential of the economy.

Question 28

Long run Phillips curve

Answer 28

Vertical curve that depicts the role of expectations in the inflationary process.

Question 29

Money illusion

Answer 29

​When individuals confuse nominal and real values when making economic decisions.

Question 30

Negative output gap

Answer 30

​How much lower actual real output is than the trend output level.

Question 31

Net investment income

Answer 31

​Difference between income earned by UK assets located abroad
and income earned by foreigner owned assets located in the UK.

Question 32

Net inward migration

Answer 32

When the number of migrants entering a country exceeds the number exiting the country.

Question 33

Net outward migration

Answer 33

​When the number of migrants entering a country is less than the number exiting the country.

Question 34

NAIRU

Answer 34

Non-accelerating inflation rate of unemployment (NAIRU): ​The rate of unemployment consistent with a country experiencing a stable rate of cost & price inflation.

Question 35

Open economy

Answer 35

A country with international trade

Question 36

Output gap

Answer 36

The difference between actual and real output and the trend output level

Question 37

Phillips curve

Answer 37

Curve that depicts the relationship between inflation and unemployment.

Question 38

Policy conflict

Answer 38

​Occurs when two policy objectives interfere and thus cannot be met
simultaneously.

Question 39

Recession

Answer 39

A fall in real GDP for 2 consecutive quarters

Question 40

Seasonable fluctuation

Answer 40

Variations in economic activity caused by seasonal changes to the economy.

Question 41

Seasonable unemployment

Answer 41

Unemployment caused by the changes in the seasons of the year.

Question 42

Speculation

Answer 42

When uncertainty of the future impacts economic transactions.

Question 43

Stagflation

Answer 43

High inflation and high unemployment

Question 44

Structural unemployment

Answer 44

​Unemployment caused by the decline in certain industries.

Question 45

Transfers

Answer 45

​Payments between countries, with which nothing of economic value is given in return.

Question 46

Unemployment rate

Answer 46

The unemployment level as a proportion of the labour force.

Question 47

Voluntary unemployment

Answer 47

When workers choose to remain unemployed.

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Question 48

Wage cost inflation

Answer 48

​A rising price level caused by an increase in wages.