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A Level Economics > Key Words - Macro > Flashcards

Key Words - Macro Flashcards

1
Q

Absolute advantage

A

A country’s ability to produce a good using less resources than another country

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2
Q

Aggregate demand curve

A

The relationship between the level of aggregate demand and the overall price level; shows planned expenditure at any given possible overall price level

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3
Q

Appreciation

A

A rise in the exchange rate within a floating exchange rate system

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4
Q

Automatic stabilisers

A

Effects by which government expenditure adjusts to offset the effects of recession and boom without the need for active intervention

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5
Q

Average propensity to consume

A

The proportion of income that households devote to consumer expenditure

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6
Q

Balance of payments

A

A set of accounts showing the transactions conducted between residents of a country and the rest of the world

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7
Q

Bank rate

A

The interest rate that is set by the Monetary Policy Committee of the Bank of England in order to influence inflation

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8
Q

Canons of Taxation

A

Four maxims devised by Adam Smith, setting out the characteristics of a good tax

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9
Q

Capital account of the balance of payments

A

Account identifying transactions in (physical) capital between the residents of a country and the rest of the world

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10
Q

Capital productivity

A

Measure of output per unit of capital

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11
Q

Claimant count of unemployment

A

The number of people claiming the Jobseekers Allowance each month

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12
Q

Comparative advantage

A

A country’s ability to produce a good relatively more efficiently (I.e. at lower opportunity cost) than another country

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13
Q

Consumer price index (CPI)

A

A measure of the general level of prices in the UK, adopted as the government’s inflation target since December 2003

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14
Q

Consumption function

A

The relationship between consumer expenditure and disposable income; its position depends upon other factors that affect how much households spend on consumer expenditure

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15
Q

Cost-push inflation

A

Inflation initiated by an increase in the costs faced by firms, arising on the supply side of the economy

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16
Q

Current account of the balance of payments

A

Account identifying transactions in goods and services between the residents of a country and the rest of the world

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17
Q

Cyclical unemployment

A

Unemployment that arises during the downturn of the economic cycle, such as recession

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18
Q

Deflation

A

A situation in which the average level of prices is falling- this is negative inflation

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19
Q

Demand-deficient unemployment

A

Unemployment that arises because of a deficiency of aggregate demand in the economy, so that equilibrium level of output is below full employment

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20
Q

Demand pull inflation

A

Inflation initiated by an increase in aggregate demand

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21
Q

Depreciation

A

A fall in the exchange rate within a floating exchange rate system; a fall in value of physical capital equipment over time as it is subject to wear and tear

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22
Q

Devaluation

A

Process whereby a government reduces the price of its currency the price of its currency relative to an agreed rate in terms of forge in exchange

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23
Q

Discouraged workers

A

People who have been unable to find employment and who are no longer looking for work

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24
Q

Disposable income

A

The income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments

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25
Q

Economically inactive

A

Those people of working age who are not looking for work, for a variety of reasons

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26
Q

Effective exchange rate

A

The exchange rate for a country relative to a weighted average of currencies of its trading partners

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27
Q

Exchange rate

A

The price of one currency in terms of another

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28
Q

Exchange Rate Mechanism (ERM)

A

A system that was set up by a group of European countries in 1979 with the objective of keeping member countries’ currencies relatively stable against each other

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29
Q

Financial account of the balance of payments

A

Account identifying transactions in financial assets between the residents of a country and the rest of the world

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30
Q

Fiscal policy

A

Decisions made by the government on is expenditure, taxation and borrowing

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31
Q

Fixed exchange rate

A

A system in which the government of a country agrees to fix the value of its currency in terms of that of another country

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32
Q

Flat rate tax system

A

A system of income tax in which each taxpayer pays the same rate of tax on income

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33
Q

Floating exchange rate

A

A system in which the exchange rate is permitted to find its own level in the market

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34
Q

Forge in exchange reserves

A

Stocks of forge in currency and gold owned by the central bank of a country to enable it to meet any mismatch between the demand and supply of the country’s currency

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35
Q

Frictional unemployment

A

Unemployment associated with the job search: that is, people who are between jobs

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36
Q

Full employment

A

A situation where people who are economically active in the workforce and are willing and able to work (at going wage rates) are able to find employment

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37
Q

GDP per capita

A

The average level of PDG per head of population

38
Q

General Agreement on Tariffs and Trade (GATT)

A

The precursor of the WTO, which organised a series of ‘rounds’ of tariff reductions

39
Q

Globalisation

A

A process by which the world’s economies are becoming more closely interpreted

40
Q

Government budget deficit (surplus)

A

The balance between government spending and revenue

41
Q

Hot money

A

Stocks of funds that are moved around the world from country to country in search of the best return

42
Q

Human capital

A

The stock of skills and expertise that contribute to a worker’s productivity; can be increased through education and training

43
Q

ILO unemployment rate

A

Measure of the percentage of the workforce who are without jobs, but are available for work, willing to work and looking for work

44
Q

In employment

A

People who are either working for firms or other organisations, or are self-employed

45
Q

Index number

A

A device for comparing the value of a variable in one period or location with a base observation (e.g. The retail price index measures the average level of prices relative to a base period)

46
Q

Inflation

A

The rate of change of the average price levels: for example, the percentage annual rate of change of the CPI

47
Q

Inflation targeting

A

An approach to macroeconomic policy whereby that central bank is charged with meeting a target for inflation

48
Q

Investment

A

Expenditure undertaken by firms to add to the capital stock

49
Q

Invisible trade

A

Trade in services

50
Q

Involuntary unemployment

A

Situation arising when an individual who would like to accept a job at the going wage rate is unable to find employment

51
Q

Keynesian school

A

A group of economists who believed that the macroeconomy could settle at an equilibrium that was below full employment

52
Q

Labour productivity

A

Measure of output per worker, or output per hour worked

53
Q

Law of comparative advantage

A

A theory arguing that there may be gains from trade arising when countries specialise in the production of goods and services in which they have a comparative advantage

54
Q

Long-run economic growth

A

The expansion of the productive capacity of an economy

55
Q

Macroeconomics

A

The study of the interrelationships between economic variables at an aggregate (macroeconomic) level

56
Q

Marginal propensity to consume

A

The proportion of additional income devoted to consumer expenditure

57
Q

Marginal propensity to import

A

The proportion of additional income that is spent on imports of goods and services

58
Q

Marginal propensity to save

A

The proportion of additional income that is saved by households

59
Q

Marginal propensity to tax

A

The proportion of additional income that is taxes

60
Q

Marginal propensity to withdraw

A

The proportion of additional income that is withdrawn from the circular flow- the sum of the marginal propensity to save, import and tax

61
Q

Monetarist school

A

A group of economists who believed that the macroeconomy always adjusts rapidly to the full employment level of output

62
Q

Monetary policy

A

The decisions made by the government regarding monetary variable ms such as the money supply and the interest rate

63
Q

Monetary Policy Committee

A

Body within the Bank of England responsible for the conduct of monetary policy

64
Q

Money stock

A

The quantity of money in the economy

65
Q

Multinational corporation (MNC)

A

A company whose production activities are carried out in more than one country

66
Q

Multiplier

A

The ratio of a change in equilibrium real income to the autonomous change that brought it about; it is defined as 1 divided by the marginal propensity to withdraw

67
Q

Natural rate of output

A

The long-run equilibrium level of output to which monetarists believe the macroeconomy will always tend; corresponds to full employment

68
Q

Net investment

A

Gross investment minus depreciation

69
Q

Nominal value

A

Value of an economic variable based on current prices, taking no account for changing prices through time

70
Q

Productivity

A

Measure of the efficiency of a factor of production

71
Q

Purchasing power parity theory of exchange rates

A

Theory stating that in the long run exchange rates (in a floating rate system) are determined by relative inflation rates in different countries

72
Q

Quantitative easing

A

A process by which the central bank purchases assets such as the government and corporate bonds in order to release additional money into the financial system

73
Q

Real exchange rate

A

The nominal exchange rate adjusted for differences in relative exchange rates between countries

74
Q

Real value

A

Value of an economic variable, taking into account changing prices through time

75
Q

Recession

A

Occurs when GDP falls for two or more consecutive quarters

76
Q

Retail price index (RPI)

A

A measure of the average price level in the UK

77
Q

Revaluation

A

Process whereby a government raises the price of domestic currency in terms of forge in currency

78
Q

Seasonal employment

A

Unemployment that arises in seasons of the year when demand is relatively low

79
Q

Short-run aggregate supply curve

A

A curve showing how much output firms would be prepared to supply in the short run at any given overall price level

80
Q

Short-run economic growth

A

An increase in the actual GDP

81
Q

Structural unemployment

A

Unemployment arising because of changes in the pattern of economic activity within an economy

82
Q

Supply-side policies

A

Range of measures intended to have a direct impact on aggregate supply- and specifically the potential capacity output of the economy

83
Q

Sustainable development

A

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

84
Q

Terms of trade

A

The relative prices at which exchange takes place; the ratio of export prices to import prices

85
Q

Total factor productivity

A

The average productivity of all factors, measured as the total output divided by the total amount of outputs used

86
Q

Trading possibility curve

A

Show the consumption possibilities under conditions of free trade

87
Q

Unemployed

A

People who are economically active but not in employment

88
Q

Visible trade

A

Trade in goods

89
Q

Voluntary unemployment

A

Situation arising when an individual chooses not to accept a job at the going wage rate

90
Q

Workforce

A

People who are economically active- either in employment or unemployment

91
Q

World Trade Organisation (WTO)

A

A multilateral body now responsible for overseeing the conduct of international trade

A Level Economics (12 decks)

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