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Macro 1 > Macro 1.7 > Flashcards

Macro 1.7 Flashcards

1
Q

What is national capital stock?

A

The stock of capital goods that has accumulated in the economy and is measured at a point in time

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2
Q

What is wealth?

A

The stock of assets which have a value at a point in time

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3
Q

What is national wealth?

A

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

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4
Q

What is national income?

A

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

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5
Q

What is national output?

A

The same as national income

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6
Q

What is national product?

A

Another name for national income and national output

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7
Q

What is consumption?

A

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

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8
Q

What is a closed economy?

A

An economy with no international trade

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9
Q

What are the determents of saving?

A

Income, Wealth, Consumer confidence, expected income, expected wealth, current debt

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10
Q

What is saving?

A

Income which is not spent

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11
Q

What is a withdrawal?

A

A leakage of spending power out of the circular flow of income into saving, taxation or imports

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12
Q

What is investment?

A

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

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13
Q

What is an injection?

A

Spending entering the circular flow of income as a result of investment, government spending and exports

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14
Q

What is an open economy?

A

An economy open to international trade

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15
Q

What is gross national income (GNI)?

A

A measurement of a country’s income including all income earned by country’s residents and firms regardless of where it’s produced

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16
Q

What is reflationary policies?

A

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

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17
Q

What is equilibrium national income?

A

The level of real output at which aggregate demand equals aggregate supply.

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18
Q

What is the calculation for aggregate demand (AD)?

A

AD = Consumption (C) + Investment (I) + Government spending (G) + (Exports (X) - Imports (M))
AD = C + I + G + X - M

19
Q

What is aggregate demand (AD)?

A

The total planned spending on real output produced within the economy

20
Q

What is aggregate supply (AS)?

A

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

21
Q

What is a shrinking circular flow?

A

When withdrawal is greater than injection

22
Q

What is a growing circular flow?

A

When injection is greater than withdrawal

23
Q

What is the rate of interest?

A

The reward for lending savings to somebody else and the cost of borrowing

24
Q

What is the availability of credits?

A

The funds available for households and firms to borrow

25
Q

When does a credit crunch occur?

A

It occurs when there is a lack of funds available in the credit market, making it difficult for borrowers to obtain financing, and leads to a rise in the cost of borrowing

26
Q

What is the distribution of income?

A

The spread of different incomes among individuals and different income groups in the economy

27
Q

What is the wealth effect?

A

It examines how a change in personal wealth influences consumer spending and economic growth

28
Q

What is aggregate consumption?

A

The spending by all households in the economy on consumer goods and services

29
Q

What is the marginal propensity to consume (MPC)?

A

The change in consumer spending arising from a change in disposable income

30
Q

How do you calculate MPC?

A

Change in consumption / Change in income

31
Q

What is an accelerator?

A

A change in the levels of investment in new capital goods induced by a change in growth rate of national income or aggregate demand

32
Q

What is the marginal propensity to save (MPS)?

A

The amount of extra income that is saved

33
Q

What is the marginal propensity to import (MPM)?

A

The amount of extra income that is spent on import?

34
Q

What is the marginal propensity to tax (MPT)?

A

The amount of extra income that is spent in taxation.

35
Q

What is a multiplier?

A

The relationship between a change in aggregate demand and the resulting usually larger change in national income

36
Q

How do you calculate the multiplier?

A

change in national income / initial change in government spending

37
Q

What is short-run aggregate supply (SRAS)?

A

Aggregate supply when the level of capital is fixed

38
Q

What is long-run aggregate supply (LRAS)?

A

Aggregate supply when the economy is producing at its production potential

39
Q

What is investment in real life?

A

A situation when people invest in shares, bonds, properties or antiques

40
Q

What is a trade surplus?

A

When exports (X) > imports (M) leading to an increase in aggregate demand

41
Q

What is a trade deficit?

A

When imports (M) > exports (X) leading to a fall in aggregate demand

42
Q

What does productivity measure?

A

The efficiency of the production process

43
Q

How do you calculate output?

A

Factors input + Factor productivity

Macro 1 (4 decks)

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