Keywords Flashcards
What is economic growth
An increase in availability of goods and services in an economy measured by gdp
What is inflation
The increase general price level of goods and services
What is the claimant count
The job seeker’s allowance (benefit) gov pays when unemployed
Whats labour force survey
Survey for how many work
What is coorporation tax
Taxes on company’s profits
What is consumption
Total goods and services purchased by household in an economy at a given time period
What is investment
Purchase of machinery/equipment using capitsl
What is government spending
Total spending by public sector eg. Health etc
What is Aggregate supply
Total amount of goods and services produced
What is equilibrium
When AS= AD
What is interest rates
Cost of borrowing and reward for saving
What is exchange rate
Currency expressed in terms of another
What is the wealth effect
When assets appreciate in value leading to consumers “feeling rich” so consume more
What is negative wealth effect
When assets deppreciate in value so people feel poorer so consume less
What is Disposable income
Income after tax
What is wealth
Stock of assets
What is savings
Disposable income that is not spent
What is credit
Ability to obtain goods or services before payment, based on agreement to pay later
What is gross investment
Investment made on capital goods
What is net investment
Investment on capital goods , accounting for depreciation
What is accelerator effect
Increase in economic growth leads to larger proportionate rise in investment
What is subsidies
Government grant given to firms to encourage production
What is unemployment trap
When people choose not to work due to welfare benefits
What is investment-led
Economic growth caused by increase in investment(machinery)
What is structural unemployment
Where workers are not working due to a lack of skills and qualifications
What is positive output gap
When actual output is above full capacity output
What is negative output gap
When actual output is less than full capacity output
What is real income
How much income someone earns accounting for inflation
What is competition policy
Policies to promote competition: such as lower prices which can encourage firms to invest in factors of production which can shift LRAS
What is circular flow of income
Way of representing flows of money between two main groups in society - producers and consumers. Includes injection and withdrawals.
What is injection in cicrular flow of income
Money(income) entering circular flow of income (households and firms)
What are withdrawals in circular of income
Money leaving circular flow of income
What is multiplier process
When an initial injection leads to a larger proportionate rise in economic growth
Multiplier ratio
Ratio of the rise in national income to initial rise in AD
Whats MPC
Proportion if extra income spent on consumption
Whats MPS
Proportion of extra income that is saved.
Whats MPM
Proportion of extra income thats spent in imports
Whats MPT
Extra income spent on taxes
What is nominal GDP
GDP without taking inflation into account
What is Real GDP
GDP with inflation taken into account
Whats GDP per capita
Measure of countrys output that accounts for its number of people
Whats GNI
Gross national income =
Gross domestic product + net income from abroad
Whats Purchasing Power Parity
PPP=
How much goods and servives would cost if countries used same currency.
Whats Easterlin Paradox
The Easterlin Paradox is the observation that, despite increases in income, there may not be a corresponding increase in happiness or life satisfaction
Whats real income
Income accounting for inflation
What is deflation
Decrease in inflation
Whats disinflation
Rise in inflation but at a slower rate
Whats CPI
Gov creates basket of goods, works out an average price of each good and compares to a year ago to see inflation has occurred
Whats RPI
CPI including housing costs
Whats cost-push inflation
Inflation caused by a rise in cost of production
Whats demand pull inflation
Inflation caused by a rise in AD
Whats Fiscal drag effect
When worker’s real income is forced into higher tax brackets due to inflation
Whats wage price spiral
A cycle of rising wages and prices
