Macro

Question 1

Inflation

Answer 1

A sustained general rise in price level across an economy (gods and services)

Question 2

Deflation

Answer 2

A sustained general fall in prices across an economy.

Question 3

Disinflation

Answer 3

A fall in the rate of inflation.

Question 4

Hyperinflation

Answer 4

This is where inflation levels are very high

Question 5

Reflation

Answer 5

Rise in GDP that comes after a recession in the economy

Question 6

Stagflation

Answer 6

A period in which inflation is rising (or very high) at a time of recession in the economy

Question 7

Aggregate

Answer 7

The sum or total

Question 8

Aggregate demand

Answer 8

The total of all demands or expenditures in the economy at any given place

Question 9

Aggregate demand curve

Answer 9

Shows the relationship between the price level and equilibrium national income. As the price level rises the equilibrium level of national income falls

Question 10

Green GDP

Answer 10

A measure of GDP high takes account of the environmental costs of production such as pollution and resource depletion

Question 11

GDP

Answer 11

A measure of the output or value added of an economy which doesn’t not include output or income from investments abroad or an allowance for the depreciation of the nations capital stock

Question 12

GNI

Answer 12

The value of goods and services produced by country over a period of time plus net overseas interest payments and dividends

Question 13

GNP

Answer 13

The market value of goods and services produces over a period of time through the labour or property supplied by citizens of a country both domestically and overseas

Question 14

Net national income

Answer 14

A measure of national income which includes both net income from investments abroad and an allowance for deprecation of the nations capital stock

Question 15

Purchasing Power Parity

Answer 15

An exchange rate of one currency for another which compares how much a typical basket of good in one country costs compared to that of another country

Question 16

Standard of living

Answer 16

How well off an individual, household or economy, measured by a complex mix of variable such as income, health, the environment, participation in society and political freedoms.

Question 17

Transfer of payments

Answer 17

Income for which there is no corresponding output, such as unemployment benefits or pension payments

Question 18

Value and volume of national income

Answer 18

The value of national income is its monetary value at the prices of the day; the volume is national income adjusted for inflation and is expressed either as an index number or in the money terms at the prices in a selected base year

Question 19

Wealth

Answer 19

Wealth is a stock of assists which produces a flow of income over time

Question 20

Investment

Answer 20

The addition to the capital stock of the economy used to produce other goods and services

Question 21

Depreciation or Capital consumption

Answer 21

Value of capital stock depreciates over time as it wears down

Question 22

Gross and Net investment

Answer 22

Gross: measure of investment ( value of investment) before depreciation - the addition to capital stock, both to replace the existing capital stock which has been used up and the creation of additional capital.
Net: Gross - value of depreciation

Question 23

Physical and Human capital

Answer 23

Physical - investment in capital e.g factories and machinery
Human - investment in education and training of workers

Question 24

Retained profit

Answer 24

Savings that firms don’t distribute to owners (shareholders) or that are held back by the firms or used to pay taxation

Question 25

Accelerator theory

Answer 25

The theory that the level of investment is related to past changes in income

Question 26

Animal spirits

Answer 26

Business confidence - John M. Keynes - the mood of managers and owners of firms about the future of their industry and the wider economy

Question 27

Capital-output ratio (accelerator coefficient)

Answer 27

The ratio between the amount of capital needed to produce a given quantity of goods and the level of output

Question 28

Average propensity to consume

Answer 28

The proportion of total income spent. It is calculated by C divided by Y

Question 29

Average propensity to save

Answer 29

The proportion of total income which is saved S divide byY

Question 30

Consumption

Answer 30

Total expenditure by households on goods and services over a period of time

Question 31

Consumption function

Answer 31

The relationship between the consumption of household and the factors which determine it

Question 32

Durable goods

Answer 32

Goods which are consumers over a long period of time, such as a television or car

Question 33

Non-durable goods

Answer 33

Goods which are consumed almost immediately like an ice cream or a packet of washing powder

Question 34

Saving function

Answer 34

The relationship between the saving of households and the factors which determine it

Question 35

Saving (personal)

Answer 35

The portion of households disposable income which is not spent over a period of time

Question 36

Wealth effect

Answer 36

The change in consumption following a change in wealth