Key terms Flashcards
living standards
Living standards refers to the material wellbeing (purchasing power of income) and the non material well being of a consumer (such as healthcare and education)
what does GDP or national income mean
the total value of goods and services produced in an economy
Aid
money, goods or services given by the government to another
balance of payments
a record of all money flows or transactions between residents of a country and the rest of the world
balancing the budget
when the government aims for government spending to equal government tax revenue
Broad money (M4)
the part of the stock of money made up of cash or other liquid assets
capital markets
where securities such as shares and bonds are issued.
they are then traded second had on a stock exchange (LSE)
capital raion
the amount of capital on a banks balance as a proportion of its loans
comparative advantage
occurs when a country can produce a good at a lower opportunity cost
corruption
deals with the misuse of public power for private benefit and its negative economic impact on society
coupon
a fixed annual interest payments
currency union
when a group of countries share a common currency
current account.
measure all currency flows in and out of a country in a particular time period in payment for imports and exports
custom union
a trading bloc in which member countries enjoy internal free trade.
these members are protected by a common external tariff
cyclical budget deficit
when the budget deficit increases as a result of a fall in AD
deflation
the persistent fall in price levels over time and the increase in the value of money
disinflation
a fall in the rate of inflation but inflation still remains positive
economic growth
an increase in real GDP overtime
Eurozone
the name for the countries that replace their national currencies with the euro
exchange rate
the price of one currency in terms of another
expenditure reducing policy
a government policy which aims to reduce a current account deficit by reducing the demand for imports by reducing AD
expenditure switching policy
a government policy which aims to reduce a current account deficit by making domestic product more attractive
export subsidies
government grant given to firms to encourage the sale of their products abroad
financial account
the part of the balance of payments that records capital flows into and out of the economy
financial markets
markets in which financial assets and securities are traded
Financial policy committee
the part of the Bank of England that is charged with the primary objective to identify, monitor and take action to remove the systemic sin to improve the resilience of the UK financial system.
fiscal policy
the use of government spending and taxation to achieve governments policy objectives
fixed exchange rate
when the value of a currency in terms of another is fixed by the government
Foreign direct investment
investment into domestic capital done by an economic agent that operates abroad
forward guidance
when a BOE attempt to send signals to the public sector about the interest rate policy in the coming years
free floating exchange rate
when the value of a currency in terms of another is solely determined by market forces
frictional unemployment
unemployment that occurs when people are in between jobs
full employment
when the number of people wishing to work equals the number of workers who employees wish to hire
globalisation
the process of growing economic integration of the worlds economies
what is economic development
The process of improving people economic wellbeing and quality of life
how is economic development measured
Uses HDI which takes into account:
- life expectancy
- mean and expected years of schooling
- Gross national income per capita.
injections
(G). Government spending
(I). investment spending by firm son capital goods
(X). Exports
liquidity
refers to the assets which can be turned into cash in short period of time without loss of value
liquidity ration
ration of a banks cash and other liquid assets to its deposits
Long run AS
the real output that can be supplied when the economy is on its production possibility frontier.
what happens when an economy operates on its production possibility frontier
when all available factors of production are employed and producing at their normal capacity level of output
long run (potential) economic growth
occurs when productive capacity increases
monetary policy
implemented by the government (BOE) in order to achieve economic objective s such as controlling inflation
moral hazard
the tendency of individuals or firms, once protected against a contingency are likely to act carelessly to make the contingency more likely
QE
the Bank of England rebuying bonds from the private sector
macro economics performance
achievement of key macroeconomic indicators
purchasing power parity
The exchange rate that equalizes the purchasing power in two economies
It is calculated by comparing how much it costs to buy a common basket of goods in the two countries.
development
improvement in quality of life (non material and material well being)
how is HDI measured
mean years of schooling, expected years of schooling, life expectancy at birth, and gross national income (GNI) per capita.
aggregate demand
total amount of money spent on those goods and services at a specific price level and point in time
