Homework Flashcards
What is the wealth effect?
The wealth effect is the idea that an increase in an individual’s wealth will lead to an increase in their consumption (spending). The concept is based on the idea that when people feel wealthier, they are more likely to feel confident in their financial situation and therefore more willing to spend money on goods and services. The wealth effect is often cited as a factor that can influence consumer spending and economic growth.
What is real national income?
Real national income is the country’s total income adjusted for inflation
What is per capital NY?
The real national income per person (divided by the population)
What is economies of scale?
The effect of economies of scale is to reduce the average (unit) costs of production.
Unit costs decrease as more are bought together (bulk buying)
What is purchasing power?
How much you can buy with your money
What is personal tax allowance?
The amount of money you are allowed to earn each tax year before you start paying income tax
What is a tariff?
A tax placed on imported goods
What are primary income flows?
Primary income is the net flow of profits, interest and dividends from investments in other countries and net remittance flows from migrant workers.
What is monetary policy?
Involves changes in interest rates the supply of money and credit and exchange rates to influence the economy
What is aggregate demand?
Total spending
C+ I + G + (X-M)
What is productivity?
Measure of the efficiency of the factors of production in the production process
What is the budget surplus?
A budget surplus occurs when government tax revenues are greater than spending in a given fiscal year.
What is windfall tax?
A windfall tax is a one-off tax levied by governments against certain industries when economic conditions allow those industries to experience above-average supernormal profits
What is economic activity?
An economic activity takes place when resources such as capital goods, labour, manufacturing techniques or intermediary products are combined to produce specific goods or services
What is a supply side policy?
Supply-side policies are mainly micro-economic policies aimed at making markets and industries operate more efficiently and contribute to a faster underlying-rate of growth of real national output.
