GOOD macroeconomic definitions

Question 1

Define the circular flow of income?

Answer 1

The movement of spending and income through an economy

Question 2

define economic growth

Answer 2

the expanison of the productive capacity of a country

Question 3

Define GDP?

Answer 3

GDP is the total value of output of goods and services in an economy in a given time period.

Question 4

Define Nominal GDP?

Answer 4

The value of national output measured at current prices

Question 5

Define Real GDP?

Answer 5

The adjust value of national output measured at constant prices, adjusted for inflation.

Question 6

Define Inflation?

Answer 6

A general and persistent rise in the price level

Question 7

Define inflation rate?

Answer 7

A general and persistent rise in the price level, measured as a percentage.

Question 8

Define demand-pull inflation?

Answer 8

Demand-pull inflation is when demand rises but supply is inadequate to meet that demand.

Question 9

What is cost push inflation?

Answer 9

When a rise in the cost of production is passed onto the consumer

Question 10

Define unemployment?

Answer 10

Where an individual does not have a job and is willing and able to work.

Question 11

Define unemployment rate?

Answer 11

the number of people unemployed as a percentage of the number of people who are economically active

Question 12

Define cyclical or demand-deficient unemployment?

Answer 12

unemployment caused by a lack of aggregate demand in the economy in accordance with changes in the economic cycle

Question 13

Define structural unemployment?

Answer 13

Unemployment caused by changes into he pattern of global supply and demand that mean that labour in a particular industry is no longer required

Question 14

Define Frictional unemployment?

Answer 14

Short-term unemployment that occurs when workers are between jobs

Question 15

Define technological unemployment?

Answer 15

Unemployment caused by capital replacing labour in a particular industry or occupation

Question 16

Define disequilibrium unemployment?

Answer 16

A situation where wages rise without any changes in supply or demand

Question 17

Define Balance of Payments?

Answer 17

A record of all movements of money between an economy and the rest of the world

Question 18

Define exchange rate?

Answer 18

An exchange rate is the price of a currency measured in terms of some other currency.

Question 19

Define Aggregate Demand?

Answer 19

The total demand for goods and services in an economy at a given price level in a given time period.

Question 20

What is Marginal Propensity to Consume (MPC)?

Answer 20

The percentage of extra income spent.

Question 21

Define investment?

Answer 21

Spending by firms on capital goods

Question 22

Define aggregate supply?

Answer 22

The total amount that producers in an economy are willing and able to supply at a given price level, in a given period of time.

Question 23

Define Fiscal Policy?

Answer 23

A collection of policies about government decisions and actions on taxation and government spending, and government borrowing.

Question 24

Define a time lag?

Answer 24

-The time between the occurrence of the problem and the desired effect of a policy applied to it

Question 25

Define the government’s budget?

Answer 25

The difference between a government’s income and its spending

Question 26

Define monetary policy?

Answer 26

Government decisions which control the supply of money

Question 27

Define Supply side policy?

Answer 27

Any government action aimed at increasing the productive capacity of a country

Question 28

Define International Trade?

Answer 28

The exchange of goods and services between countries

Question 29

Define Protectionism?

Answer 29

Protecting the market share and employment in domestic industries by restricting/reducing the quantity of imports