Key Definitions Flashcards
What is fiscal policy?
Use of taxation and government spending to achieve the govt’s policy objectives.
What is monetary policy?
The use of interest rates to achieve the govt’s policy objectives
What is economic growth?
An increase in the economy’s potential level of real output.
What is economic cycle?
The fluctuation of real output above and below the trend output line taking place over 4 - 12 years.
What is a recession?
A fall in real output for 6 months or more.
What is output gap?
The difference between actual output and the trend output line.
What is national income?
The flow of new output produced by the economy in a particular period.
What is consumption?
Total planned spending by households on real output produced within the economy.
What is investment?
Total planned spending by firms on capital goods produced within the economy.
What is saving?
Income which is not spent.
What is wealth?
The stock of assets, or things that have value, which people own.
What is the accelerator effect?
A change in the level of investment in new capital goods induced by a change in national income.
What is inflation?
A persistent or continuing rise in the average price level.
What is a claimant count?
The method of measuring unemployment according to those people who are claiming unemployment-related benefits.
What is a labour force survey?
A quarterly sample survey of households in the UK. Its purpose is to provide information on the UK labour market.
