Ext. Definitions - STEEPLE Economic

Question 1

Define GDP

Answer 1

Gross Domestic Product - the total value of output produced in an economy in a year

Question 2

Define standard of living

Answer 2

The amount of goods and services a person can buy with their income in a year

Question 3

Define inflation

Answer 3

The persistent general tendency of prices in the economy to rise

Question 4

Define CPI

Answer 4

Consumer Price Index - A measure that examines the weighted average of prices of a basket of consumer goods/services

Question 5

Define exchange rates

Answer 5

Value of one currency in terms of another

Question 6

Define import

Answer 6

A sale leading to money going outside of the UK

Question 7

Define export

Answer 7

A sale leading to money going into the UK

Question 8

Define interest rate

Answer 8

The reward for saving and the cost of borrowing expressed as a percentage of the money saved or borrowed

Question 9

Define unemployment

Answer 9

A situation in which people who are able and willing to find work are not able to find employment

Question 10

Define balance of payments/trade

Answer 10

Difference between the value of exports and imports

Question 11

Define indirect tax

Answer 11

Taxes on expenditure, paid to the tax authorities but indirectly by the suppliers of the goods/services

Question 12

Define direct tax

Answer 12

Taxes on income and profits. Paid directly by the bearer to the tax authorities

Question 13

Define trade deficit

Answer 13

If imports exceed exports, there is a balance of trade deficit

Question 14

Define trade surplus

Answer 14

If exports succeed imports there is a balance of trade surplus

Question 15

Define income tax

Answer 15

Tax taken out of a person’s income - in the UK it is progressive (proportionate to salary)

Question 16

Define National Insurance

Answer 16

Taken as a contribution towards the state pension and treatment under the NHS - employer also contributes

Question 17

Define stamp duty

Answer 17

Is a duty levied on the legal recognition of certain documents e.g. buying a property

Question 18

Define corporation tax

Answer 18

A tax imposed on the net income of the company

Question 19

Define VAT

Answer 19

Value Added Tax - when a consumer buys a product that is eligible for VAT it is automatically included in the price they pay

Question 20

Define monetary policy

Answer 20

Manipulation of the level of demand in the economy using the rate of interest (controlled by MPC/BofE)

Question 21

Define fiscal policy

Answer 21

Economic policy conducted by the government through taxation and public spending - controlled by government and led by the Chancellor of Exchequer - Phillip Hammond (affects level of demand in an economy)

Question 22

Define multiplier effect

Answer 22

The effect of changes in economic activity in one sector or other sectors; if one business experiences a rise or fall in demand for its products, this has a knock on effect on businesses supplying it

Question 23

Define supply-side policies

Answer 23

Aim to improve the economy’s overall productive capacity (Act on supply side rather than demand) intended to increase the output of an economy

Question 24

Define Business/Economic Cycle

Answer 24

The observed pattern of increases and decreases of economic growth (measure by % change in GDP) over the long term

Question 25

Define Boom

Answer 25

A stage of the business cycle where confidence is optimistic and unemployment is low

Question 26

Define Recession

Answer 26

When GDP falls for 2 consecutive quarters, a stage in the business cycle where confidence is falling and inflation is slowing down

Question 27

Define Slump

Answer 27

A stage in the business cycle, where confidence is pessimistic and spending is low

Question 28

Define Recovery

Answer 28

A stage in the business cycle where income is rising and investment is only for essentials