Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics Unit 2 > Key Words > Flashcards

Key Words Flashcards

0
Q

Balance of payments

A

Exports- imports
A balance of payments deficit= imports>exports
A balance of payments surplus= exports> imports

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
1
Q

Supply

A

Total amount of goods/ services that producers are willing and able to supply to a market at any given time period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Capital spending

A

Government spending to improve productive capacity of economy. Eg on schools. This pushes LRAS out.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Bank of England

A

Mark carney runs BOE.

Responsible for monetary policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Classical view

A

Economists who believed that recessions and slumps would cure themselves

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Cyclical unemployment

A

Demand deficient unemployment as a result of the economic cycle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Aggregate demand

A

AD= C+I+G+(X-M)
Consumption + investment + government spending + (exports- imports)
Total expenditure in the economy= GDP/AD/NI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Budget

A

Balanced budget= government spending= tax revenue
Budget deficit= government spending> tax revenue
Budget surplus= tax revenue> government spending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Government spending

A

2 types- current (wages, daily) and capital (infrastructure… Supply side policy)
Injection
Positive multiplier

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Cost-push inflation

A

Where increased costs of production (shifts in AS) increases the price level.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Consumption

A 
60% of AD
Positive multiplier
Injection
By households
Affected by confidence, income tax, inflation...
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Investment

A

Shifts out LRAS/ PPF- increasing productive capacity
Spending by firms on capital goods (machinery/ equipment)
Positive multiplier
Injection
Preferred to consumer-led growth by mark carney as it stabilises economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Contractionary fiscal policy

A

Increasing levels of tax revenue and decreasing government spending.
Use when economy is at positive output gap

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Deflation

A

A situation where prices persistently fall

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Demand

A

Total amount of goods/ services that consumers are willing and able to purchase at any given time period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Demand-pull inflation

A

An increase in the price level due to a shift of AD right

AD>AS (excess demand so prices rise)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Demand-side fiscal policy

A

Changes in fiscal policy (tax and government spending) aimed at influencing one or more components of AD

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Discretionary stabilisers

A

Deliberate government intervention of fiscal policy to be on the trend rate of growth (2.5%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Disposable income

A

Income available to households after tax/ bills have been considered from the household salaries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Personal allowance

A

Amount of money that isn’t taxed on, up to £10,500

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

4 government aims

A

Growth
Unemployment
Inflation
Balance of payments (trade)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Monetary policy

A

Involves interest rates and quantities easing (creating new money, money supply)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Inflation

A

Target of 2%
Measured in CPI (consumer price index)
One of 4 government aims

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Investment schedule

A

When increased interest rates causes less investment and decreased interest rates causes more investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Accelerator effect
Increase in national income causes a proportionately larger change in investment
25
Excess demand
When demand is greater than supply
26
Voluntary unemployment
Workers who are not prepared to take a job at the current wage rate
28
Depreciation of the pound
``` Weak Pound Imports Dear Exports Cheap ```
29
Exports
Goods/ services sold abroad. | Export-led growth is preferable to mark carney as it stabilises economy
30
GDP per capita
GDP divided by the population
31
GDP
Gross domestic product=aggregate demand= national income | Total amount of money going into the economy
32
Real GDP
Price of goods/ services including the rate of inflation
33
Automatic stabilisers
Changes to fiscal policy that happens without government intervention, automatically. Eg during a negative output gap, welfare benefit spending increases because more people are unemployed, this increases AD and reduces the output gap
34
Expansionary fiscal policy
Increasing government spending and reducing tax revenue. Used during a negative output gap, to get onto the trend rate of growth (2.5%)
35
Factors of production
Capital Enterprise Land Labour
36
Frictional unemployment
People between jobs
37
PPF
Production possibility frontier= long-run aggregate supply Shows maximum possible production combinations of 2 goods Shifts left when a natural disaster occurs Shifts right when there's an increase in capital goods/ capacity
38
Imports
Goods/ services that are purchased from abroad | More imports are bought when AD shifts right. But if imports are bought (more than exports) AD shifts left
39
Inflationary pressure
Likely to lead to increased prices | High inflationary pressures when there's a positive output gap
40
Excess supply
When supply is greater than demand
41
Savings ratio
Ratio of total savings (leakage) to total disposable income
42
Injections
Money that originates outside of the circular flow of income and so increases AD Consumption/ exports/ government spending/ investment are injections
43
Leakages
Money that leaves the circular flow of income | Savings/ imports/ tax are leakages
43
Interest rate
Cost of borrowing money, currently= 0.5%
45
Expansionary monetary policy
Decreasing interest rates and quanta truce easing. | Used during a negative output gap to get growth onto trend rate of growth
46
Contractionary monetary policy
Increasing interest rates | Used when economy is at a positive output gap, to get down to the trend rate of growth
47
Multiplier effect
``` Positive= increase in component of AD causes a greater proportional increase in AD Negative= decrease in component of AD causes a greater proportional decrease in AD ```
48
Fiscal policy
Tax and government spending changing
48
Policy trade off
Government is unable to achieve all 4 government aims simultaneously, involves an opportunity cost (cost of the next best option foregone)
49
Production
Process that converts factors of production into goods/ services
51
Recession
When an economy is growing at less than it long-term trend rate of growth
52
Profit
Income/ revenue of a firm- costs of production
53
Structural unemployment
Unemployment resulting from changing patterns of demand in the labour market and not matching the skills and locations of those seeking work
54
Spare capacity
Level of unemployed resources, shown on a graph by the distance between FE and current output
55
Rebalancing economy
Instead of consumer/ government spending-led growth, mark carney wants export/ investment-led growth. This reduces the debt
56
Appreciation of the pound
``` Strong Pound Imports Cheap Exports Dear ```
56
Supply side policies
Shifts LRAS out by government spending on training/ schools...
57
Subsidies
Payments by the government to producers to encourage supply at a lower price to encourage consumption
58
Supply-side fiscal policies
Changes in level/ structure of government spending/ tax level to improve supply side of economy. Shifts out LRAS/ PPF
59
Supply-side shock
Something that increases/ reduces costs of production (affects AS) Eg. Large increase in price of oil
60
Economic cycle
Fluctuations in real GDP/ economic growth
61
Income tax
Tax on households income. Doesn't affect AS, affects AD

Economics Unit 2 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions