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Macroeconomics Year 1 > Keywords > Flashcards

Keywords Flashcards

1
Q

Economic growth

A

The increase in the potential level of real output the economy can produce over a period of time

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2
Q

PPF/PPC curve

A

a curve depicting the various combinations of two products that can be produced when all the available resources are fully and efficiently employed

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3
Q

GDP

A

the sum of all goods and services, or level of output, produced in an economy over time

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4
Q

Inflation

A

a persistent or continuous rise in the average price level

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5
Q

Disinflation

A

when the rate of inflation id falling but still positive and the price level is rising slower than previously

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6
Q

Deflation

A

a persistent or continuing fall in the average price level

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7
Q

Hyperinflation

A

a rapid and out of control rise in the average price level

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8
Q

Balance of payments

A

a record of all the currency flows into and out of a country in a particular time period

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9
Q

Imports

A

goods or services produced in other countries, sold to residents of this country

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10
Q

Exports

A

domestically produced goods or services sold to residents of other countries

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11
Q

Current account

A

measures all the currency flows into and out of the country in a particular time period in payment for exports and imports together with income and transfer flows

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12
Q

Surplus

A

occurs when government spending is less than government revenue

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13
Q

Deficit

A

occurs when government spending is more than government revenue

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14
Q

Unemployment

A

when not all of those who are willing to work and able to work are employed

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15
Q

LFS

A

a quarterly sample survey of households in the UK. provides information on the labour market. gets information on personal circumstances and labour market status during a period of 1-4 weeks

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16
Q

Claimant count

A

the method of measuring unemployment according to those people who are claiming unemployment-related benefits

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17
Q

Structual unemployment

A

long term unemployment occurring when industries are declining. also happens within a growing industry if automation reduces the demand for labour. associated with occupational and geographical immobility of labour

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18
Q

Fiscal unemployment

A

unemployment which is usually short term and occurs when a worker switches between jobs. also known a transitional unemployment

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19
Q

Cyclical unemployment

A

unemployment caused by a lack of aggregate demand and occurs when a country goes into a recession or a depression

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20
Q

AD

A

C+I+G+(X-M)

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21
Q

Aggregate demand

A

the total planned spending on real output produced within the economy

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22
Q

SRAS

A

aggregate supply when the level of capital is fixed, though the utilisation of existing factors of production can be altered so as to change the level of real output

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23
Q

LRAS

A

aggregate supply when the economy is producing at its production potential. if more factors become available or productivity rises, the curve shifts to the right

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24
Q

Index numbers

A

a number used in an index to enable accurate comparisons over time to be made.

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25
Q

Base number

A

normally 100.

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26
Q

Index numbers formula

A

(number in current year/number in base year) X 100

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27
Q

Economic cycle

A

upswing and downside in aggregate economic activity taking place over 4-12 years

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28
Q

Boom

A

occurs when real national output is rising at a faster rate then the trend rate of growth

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29
Q

Recession

A

a fall in real GDP for 6 months or more

30
Q

Slump/ depression

A

prolonged and deep recession leding to a significant fall in output and average living standards- more than 25%

31
Q

Trend growth

A

the rate at which output can grow on a sustained basis without putting pressure on inflation. reflects the annual average percentage increase in the productive capacity of the economy

32
Q

Lag indicators

A

an economic statistic that tends to have a delayed reation to a changein the economic cycle

33
Q

Lead indicators

A

an economic statistic that tends to predit future changes in the economic cycle

34
Q

Policy conflict

A

occurs when two policy objectives cannot both be achieved at the same time: the better the performance in achieving one objective, the worse the performance in achieving another

35
Q

Income tax

A

tax levied directly on personal income

36
Q

VAT

A

tax that is dependant on the good or sevice. 20% in the UK

37
Q

Policy objective

A

a target or goal that policy-makers aim to hit

38
Q

Real GDP

A

a measure of all the goods and services produced in an economy, adjusted for price changes or inflation

39
Q

Nominal GDP

A

GDP measured at the current market prices without removing the effects of inflation

40
Q

Full employment

A

3% or less of the labour force are unemployed. also is the level of unemployment occurring at the market-clearing real wage rate, where the number of workers whom employers wish to hire equals the number of workers wanting to work

41
Q

Price index

A

an index number showing the extent to which a price or a basket of prices has changed over a month, a quarter of a year or year in comparison to the base year

42
Q

Consumer price index

A

the official measure used to calculate the rate of consumer price inflation in the UK. calculates the average price increases of a basket of 700 different consumer goods and services. the government currently uses the CPI for the indexation of state pensions and welfare benefits and for setting monetary policy targets

43
Q

Retail price index

A

an older measure of consumer price inflation in the UK. the government currently uses the RPI for uprating each year the cost of TV and motor vehicle licences, together sometimes with goods like alcoholic drinks

44
Q

Indexation

A

the automatic adjustment of items such as pensions and welfare benefits to changes in the price level through the use of a price index

45
Q

Balance of trade

A

the difference between the money value of a country’s imports and its exports. the largest component of a country’s balance of payments on the current account

46
Q

Trade-off between policy objectives

A

although it may be impossible to achieve two desirable objectives at the same time. policy-makers may be able to choose an acceptable combination lying between the extremes

47
Q

Keynesian economists

A

followers of the economist John Maynard Keynes who generally believe that governments should manage the economy particularly through the use of fiscal policy

48
Q

Pro-free market economists

A

opponents of Keynesian economists who dislike government intervention in the economy and who much prefer the operation of free markets

49
Q

Monetary policy

A

the use by the government and its agent the bak of England of interest rates and other monetary instruments to try to achieve the government’s policy objectives

50
Q

Fiscal policy

A

the use by the government spending and taxation to try to achieve the government’s policy objectives

51
Q

Performance indicator

A

provides information for judging the success or failure of a particular type of government policy such as fiscal policy or monetary policy

52
Q

National capital stock

A

the stock of capital goods such as buildings and machinery in the economy that has accumulated over time and is measured at a point in time

53
Q

Wealth

A

the stock of assets which have value at a point in time as distinct from income which is a flow generated over a period of time

54
Q

National wealth

A

the stock of all goods that exist at a point in time that have value in the economy

55
Q

National income

A

the flow of new output produced by the economy in a particular period

56
Q

National output

A

the same as national income namely the flow of new output produced by the economy in a particular period

57
Q

National product

A

another name for national income and national output

58
Q

Consumption

A

total planned spending by households on consumer goods and services produced within the economy

59
Q

Closed economy

A

an economy with no international trade

60
Q

Saving

A

income which is not spent

61
Q

Withdrawl

A

a leakage of spending power out of the circular flow of income into savings, taxation or imports

62
Q

Investment

A

total planned spending by firms on capital goods produced within the economy

63
Q

Injection

A

spending entering the circular flow of income as a result of investments government spending and exports

64
Q

Open economy

A

an economy open to international trade

65
Q

Reflection policies

A

policies that increase aggregate demand with the intention of increasing real output and employment

66
Q

Equilibrium national income

A

the level of real output at which aggregate demand equals aggregate supply. it is the level of income at which withdrawals from the circular flow of income equals the injections into the flow also known as macroeconomic equilibrium

67
Q

Aggregate demand

A

the total planned spending on real output produced within the economy

68
Q

Aggregate supply

A

the level of real national output that producers are prepared to supply at different average price levels

69
Q

Economic shock

A

an unexpected event hitting the economy. economy shocks can be demand-side or supply-side shocks and unfavourable or favourable

70
Q

Consumption

A

total planned spending by households on consumer goods and services produced within the economy

71
Q

Rate of interest

A

the reward for lending savings to somebody else and the cost oof borrowing

72
Q

Life-cycle theory of consumption

A

a theory that explains consumption and savings in terms of how people expect their incomes to change over the whole of their life cycle

Macroeconomics Year 1 (2 decks)

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