Economic Terms Flashcards
What is a subsidy?
Payment by govt to producers to encourage production of good or service to lower prices
Accelerator effect
The relation between the change in new investment and the rate of change of national income
Actual supply
The amount that producers produce
Aggregate demand
Total planned expenditure in the economy.
Known by C +I +G + (X-M)
Aggregate supply
The total value of goods and services supplied in the economy
Allocative efficiency
This is achieved in an economy when it is not possible to make anyone better off without making someone worse off, or you cannot produce more of one good without making less of another.
Allocative efficiency
This is achieved in an economy when it is not possible to make anyone better off without making someone worse off, or you cannot produce more of one good without making less of another.
Balance of payment
Exports minus imports - a deficit means more is imported than exported.
Balance of trade
Visible exports minus visible imports
Balance of trade
Visible exports minus visible
Balanced budget
Where government receipts equal government spending in a financial year.
Boom/bust policy
The govt using macroeconomic tools to stimulate and then contract the economy.
Broad money
Money that is held in banks and building societies but that is not immediately accessible.
Budget deficit
Where govt spending exceeds govt receipts in a financial year (PSNCR)
Budget surplus
Where govt receipts exceed govt spending in a financial year . (PSDR)
Buffer stock
And intervention system that aims to limit the fluctuations of the price of a commodity
Capital spending
Government spending to improve the productive capacity of the nation, including infrastructure, schools and hospitals
Central Bank
The financial institution in a country or a group of countries typically responsible for issuing notes and coins and setting short-term interest rates
Classic view
Economist who believed that recessions and slumps would cure themselves
Commodity
A good that is traded but usually refers to roll materials or semimanufactured goods that are traded in bulk such as Tea , iron ore, oil or wheat. Often they are unbranded goods (homogeneous) were all firms’ products are very similar and on distinguishable from each other
Competition
A market situation in which there are a large number of buyers and sellers
Complimentary products
Goods that are consumed together for example bread and butter or DVDs and DVD players
Complete market failure
Where is the free market fails to provide a product at all i.e. the case of public goods
Composite demand
A good that is demanded for more than one purpose so that an increase in demand for one purpose reduces the available supply for the other purpose, typically leading to higher prices, e.g. milk used in butter and cheese
Contraction in supply
When the amount offered for sale is reduced because the price level has fallen
Contractionary fiscal policy is
Increasing levels of tax revenue relative to government spending, appropriate during a boom in economic activity
Contractions in demand
Falls in the quantity demanded cause by rises and prices
Cost push inflation
Where in Increased costs of production result in firms increasing their prices leading to an increase in the general price level
Cpi consumer price index
A measure of the price level similar to the H I CP or harmonised index of consumer prices used widely in the Eurozone. used since 2004 as the target measure for inflation by the government and MPC
Credit crunch
We are borrowing becomes more expensive or unavailable
Current account equilibrium
Where the current account exercises no effect on the domestic macroeconomy
Current spending
Government spending on the day-to-day running of the public sector, including all materials and wages of public sector workers
Cyclical unemployment
Demand deficient unemployment that occurs as a result of the economic cycle
Deflation
A situation where prices persistently fall
Deindustrialisation
A fall in the proportion of national output accounted for by the manufacturing sector of the economy
Demand
The amount that consumers are willing and able to buy at each given price level
Demand deficient unemployment
Insufficient aggregate demand in the economy to employ the available labour
Demand pull inflation
Where aggregate demand exceeds aggregate supply leading to an increase in the level of prices
Demand-side fiscal policy
Changes in the level of structure of government spending and taxation aimed at influencing one on more of the components of aggregate demand
Economic indices
Haven’t a clue
