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Economics definitions > Macro > Flashcards

Macro Flashcards

1
Q

Macroeconomics

A

The study of the whole economy at the aggregate level.

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2
Q

Ceteris paribus

A

All other factors remaining constant, when examining a part of the economy

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3
Q

Recession

A

2 periods of consecutive negative economic growth

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4
Q

Depression

A

A deep recession

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5
Q

Fiscal policy

A

Use of government spending and taxation to achieve policy objectives

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6
Q

Monetary policy

A

Use of interest rates to achieve a policy objective

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7
Q

Monetarism

A

The belief excessive inflation is as a result of growth of the money supply, which monetary policy should control

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8
Q

Supply side economics

A

Policy aimed at improving the competitiveness and efficiency of markets

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9
Q

Policy instrument

A

A tool or set of tools used to try and achieve a policy objective

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10
Q

Policy objective

A

A goal that policy makers aim to hit

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11
Q

Policy conflict

A

When two policy objectives can’t be met at the same time, better one goes the worse another goes.

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12
Q

Policy trade off

A

A satisfactory combination of policy objectives used as two policy objectives can’t both be met.

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13
Q

Policy indicator

A

Provides information about what is happening in the economy

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14
Q

Economic growth

A

A increase in an economy’s potential level of real output, an outward shift in the PPF.

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15
Q

National income/output

A

The flow of new output produced in the economy in a partcicular period (a year)

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16
Q

Economic cycle

A

The fluctuation of real output above and below the trand line of economic growth

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17
Q

Output gap

A

The difference between actual growth and trend growth

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18
Q

Aggregate demand

A

The total planned spending on real output in an economy.

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19
Q

Consumption

A

The total planned spending by households on real output in an economy

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20
Q

Investment

A

Total planned spending by firms on real output in an economy.

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21
Q

Savings

A

Income which is not spent

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22
Q

Interest rates

A

The reward for saving and the cost of borrowing

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23
Q

Wealth

A

The stock of assets or things that have value, which people own.

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24
Q

Technical progress

A

The improvement in methods of production, leading to new types and better quality goods.

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25
Q

Accelerator

A

The change in the level of investment in new capital goods induced by a change in national income. Depends on an economies accelerator and capital-output ratio

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26
Q

Equilibrium national output

A

The level of national income at which withdrawals equal injections into the circular flow. S=I

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27
Q

Closed economy

A

A economy with no international trade

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28
Q

Open economy

A

A economy with imports and exports

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29
Q

Macroeconomic equilibrium

A

AD=AS or S=I

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30
Q

Aggregate supply

A

The level of RNO at which producers are prepared to sell at average price levels

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31
Q

Inflation

A

The persistent and continuing rise of average price level

32
Q

Reflation

A

The increased level of real output following an increase in AD

33
Q

Claimant count

A

Measuring unemployment based on the number people claiming the claimant count

34
Q

Labour force survey

A

A quarterly sample of households providing information on the labour market.

35
Q

Full employment

A

Beveridge : 3% or less unemployed. Free market: When the number of people employed are the number of people who want jobs at the current wage rate.

36
Q

Frictional employment

A

Voluntary unemployment, when you move from one job to another.

37
Q

Structural unemployment

A

Caused by a structural change in industries.

38
Q

Cyclical unemployment

A

When a lack of AD leads to unemployment

39
Q

Seasonal unemployment

A

Caused by things like the weather and xmas

40
Q

Deflation

A

The persistent or continuing fall in the average price level

41
Q

Demand pull inflation

A

Inflation caused by an increase in AD

42
Q

Cost push inflation

A

Inflation caused by a rise in the cost of the factors of production causing a shrink in AS

43
Q

Current account

A

Measures currency imports minus currency exports

44
Q

Export

A

A domestically produced good sold to other countries

45
Q

Import

A

A good or service produced abroad and sold here

46
Q

Investment income

A

The profit and interest income flowing into a country that has been generated from abroad

47
Q

Transfers

A

Payments between countries for which there is no service given in return

48
Q

Balance of trade

A

Exports-imports

49
Q

Central bank

A

Implements monetary policy on behalf of the government

50
Q

Commercial bank

A

A bank such as Barclays that aims to make a profit form commercial business

51
Q

BoE’s interest rate

A

The rate of interest at which the BoE lends to commercial banks to increase their liquidity

52
Q

Liquidity

A

The ease at which assets can be turned into cash quickly at a pre-known rate or price =. Cash is the most liquid of all assets

53
Q

Mortgage

A

A long term loan to a house owner that is secured by a property

54
Q

Lender of the last resort function

A

The willingness of the BoE to lend to banks to increase liquidity and faith in the banking system

55
Q

Money supply

A

The stock of money in the economy

56
Q

Balance budget

A

G=T

57
Q

Budget deficit

A

G>T

58
Q

Budget surplus

A

G<T

59
Q

Deficit financing

A

Deliberately running a budget deficit and financing it by borrowing

60
Q

Demand side fiscal policy

A

Used to increase or decrease the level of AD

61
Q

Expansionary fiscal policy

A

Used to increase the level of AD

62
Q

Contactionary fiscal policy

A

Used to decrease the level of AD

63
Q

Gov spending multiplier

A

The relationship between Gov spending and change in national income

64
Q

National income multiplier

A

The relationship between change in AD and change in national income

65
Q

Tax multiplier

A

The relationship between a change in taxation and a change in national income

66
Q

Crowding out

A

The situation in which an increase in government spending displaces the private sector with therefore little increase in AD

67
Q

Discretionary fiscal policy

A

Making small changes to G and T to fine tune the level of AD

68
Q

Supply-side fiscal policy

A

Used to increase an economy’s ability to produce and supply goods.

69
Q

National debt

A

The stock of all past government loans that has not been paid back

70
Q

Progressive tax

A

Where proportion paid increases as income increases

71
Q

Supply-side economics

A

Government policy to improve the competitiveness of markets

72
Q

Deregulation

A

Removing of previous regulations

73
Q

Marketisation

A

The shift of provision of goods into the market sector

74
Q

Privatisation

A

The movement of state-owned assets into the private sector

75
Q

Trickle-down effect

A

The income paid by rich people to the poorer people they employ

Economics definitions (4 decks)

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