Key Words Flashcards
Absolute advantage
a country has an absolute advantage if it can record of all the currency flows into and out
of a country in a particular time
Accelerator
a change in the level of investment in new capital goods induced by a change in national income or output. The size of the accelerator depends on the economy’s capital-output ratio.
Actual output
level of real output produced in the economy in a particular year - not to be confused with the trend level of output, which is what the economy is capable of producing when working at full capacity. Actual output differs from the trend level of output when there are output gaps;
AD
total planned spending on real output in the economy at different price levels.
AS
the level of real national output that producers are prepared to supply at different average price levels.
Aid
money, goods and services, and
‘soft loans given by the government of one country or a multilateral institution such as the World Bank to help another country. Non-government organisations (NGOs) such as Oxfam also provide aid.
Assets
a resource (physical or otherwise) that can be sold for money.
Automatic stabilisers
fiscal policy instruments (e.g. progressive taxes and income-related welfare benefits) that automatically stimulate aggregate demand in an economic downswing and depress aggregate demand in an upswing, thereby ‘smoothing’ the economic cycle,
Availability of credit
funds available for households and firms to borrow,
balance of payments
a record of all the currency flows into and out of a country in a particular time period.
Balance of payments equilibrium
a situation in which a deficit or surplus on the current account of the balance of payments is exactly matched by capital inflows or outflows in the other parts of the balance of payments.
Balance of Primary income
comprises inward income flowing into the economy in the current year, generated by UK-owned capital assets located overseas le.g. shares owned in foreign companies, or land owned overseas, and outward flows of income from the economy in the current year, generated by overseas-owned capital assets located in the UK.
Balance of secondary income
current transfers leg. gifts of money, international aid and transfers between the UK and the EU], flowing into or out of the UK economy in a particular year.
Balance of trade
the difference between the money value of a country’s imports and its exports. Balance of trade is the largest component of a country’s balance of payments on current account.
balance of trade deficit
when the money value of a country’s imports exceeds the money value of its exports.
Balance of trade in goods
the part of the current account measuring payments for exports and imports of goods. The difference between the total value of exports and the total value of imports is sometimes called the ‘balance of visible trade’
Balance of trade in services
part of the current account, the difference between the payments for the exports of services and the payments for the imports of services,
Balance of trade surplus
when the money value of a country’s exports exceeds the money value of its imports
Balanced budget
achieved when government spending equals
government revenue (G = TI.
Bank rate
the rate of interest that the Bank of England pays to commercial banks on their deposits held at the Bank of England lit is also referred to as the base ratel
bonds
financial securities sold by companies (corporate bonds) or by governments (government bonds] which are a form of long-term borrowing. Bonds usually have a maturity date on which they are redeemed, with the borrower usually making a fixed interest payment each year until the bond matures).
broad money
the part of the stock of money (or money supply| made up of cash, other liquid assets such as bank and building society deposits, but also some illiquid assets. The measure of broad money used by the Bank of England is called M4.
budget deficit
occurs when government spending exceeds government revenue (G > T).
budget surplus
occurs when government spending is less than government revenue (G < T).