Macro Flashcards
Inflation
A sustained general rise in price level across an economy (gods and services)
Deflation
A sustained general fall in prices across an economy.
Disinflation
A fall in the rate of inflation.
Hyperinflation
This is where inflation levels are very high
Reflation
Rise in GDP that comes after a recession in the economy
Stagflation
A period in which inflation is rising (or very high) at a time of recession in the economy
Aggregate
The sum or total
Aggregate demand
The total of all demands or expenditures in the economy at any given place
Aggregate demand curve
Shows the relationship between the price level and equilibrium national income. As the price level rises the equilibrium level of national income falls
Green GDP
A measure of GDP high takes account of the environmental costs of production such as pollution and resource depletion
GDP
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
GNI
The value of goods and services produced by country over a period of time plus net overseas interest payments and dividends
GNP
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
Net national income
A measure of national income which includes both net income from investments abroad and an allowance for deprecation of the nations capital stock
Purchasing Power Parity
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
Standard of living
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.
Transfer of payments
Income for which there is no corresponding output, such as unemployment benefits or pension payments
Value and volume of national income
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
Wealth
Wealth is a stock of assists which produces a flow of income over time
Investment
The addition to the capital stock of the economy used to produce other goods and services
Depreciation or Capital consumption
Value of capital stock depreciates over time as it wears down
Gross and Net investment
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
Physical and Human capital
Physical - investment in capital e.g factories and machinery
Human - investment in education and training of workers
Retained profit
Savings that firms don’t distribute to owners (shareholders) or that are held back by the firms or used to pay taxation
Accelerator theory
The theory that the level of investment is related to past changes in income
Animal spirits
Business confidence - John M. Keynes - the mood of managers and owners of firms about the future of their industry and the wider economy
Capital-output ratio (accelerator coefficient)
The ratio between the amount of capital needed to produce a given quantity of goods and the level of output
Average propensity to consume
The proportion of total income spent. It is calculated by C divided by Y
Average propensity to save
The proportion of total income which is saved S divide byY
Consumption
Total expenditure by households on goods and services over a period of time
Consumption function
The relationship between the consumption of household and the factors which determine it
Durable goods
Goods which are consumers over a long period of time, such as a television or car
Non-durable goods
Goods which are consumed almost immediately like an ice cream or a packet of washing powder
Saving function
The relationship between the saving of households and the factors which determine it
Saving (personal)
The portion of households disposable income which is not spent over a period of time
Wealth effect
The change in consumption following a change in wealth
