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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
Accelerator
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
26
Equilibrium national output
The level of national income at which withdrawals equal injections into the circular flow. S=I
27
Closed economy
A economy with no international trade
28
Open economy
A economy with imports and exports
29
Macroeconomic equilibrium
AD=AS or S=I
30
Aggregate supply
The level of RNO at which producers are prepared to sell at average price levels
31
Inflation
The persistent and continuing rise of average price level
32
Reflation
The increased level of real output following an increase in AD
33
Claimant count
Measuring unemployment based on the number people claiming the claimant count
34
Labour force survey
A quarterly sample of households providing information on the labour market.
35
Full employment
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
Frictional employment
Voluntary unemployment, when you move from one job to another.
37
Structural unemployment
Caused by a structural change in industries.
38
Cyclical unemployment
When a lack of AD leads to unemployment
39
Seasonal unemployment
Caused by things like the weather and xmas
40
Deflation
The persistent or continuing fall in the average price level
41
Demand pull inflation
Inflation caused by an increase in AD
42
Cost push inflation
Inflation caused by a rise in the cost of the factors of production causing a shrink in AS
43
Current account
Measures currency imports minus currency exports
44
Export
A domestically produced good sold to other countries
45
Import
A good or service produced abroad and sold here
46
Investment income
The profit and interest income flowing into a country that has been generated from abroad
47
Transfers
Payments between countries for which there is no service given in return
48
Balance of trade
Exports-imports
49
Central bank
Implements monetary policy on behalf of the government
50
Commercial bank
A bank such as Barclays that aims to make a profit form commercial business
51
BoE's interest rate
The rate of interest at which the BoE lends to commercial banks to increase their liquidity
52
Liquidity
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
Mortgage
A long term loan to a house owner that is secured by a property
54
Lender of the last resort function
The willingness of the BoE to lend to banks to increase liquidity and faith in the banking system
55
Money supply
The stock of money in the economy
56
Balance budget
G=T
57
Budget deficit
G>T
58
Budget surplus
G
59
Deficit financing
Deliberately running a budget deficit and financing it by borrowing
60
Demand side fiscal policy
Used to increase or decrease the level of AD
61
Expansionary fiscal policy
Used to increase the level of AD
62
Contactionary fiscal policy
Used to decrease the level of AD
63
Gov spending multiplier
The relationship between Gov spending and change in national income
64
National income multiplier
The relationship between change in AD and change in national income
65
Tax multiplier
The relationship between a change in taxation and a change in national income
66
Crowding out
The situation in which an increase in government spending displaces the private sector with therefore little increase in AD
67
Discretionary fiscal policy
Making small changes to G and T to fine tune the level of AD
68
Supply-side fiscal policy
Used to increase an economy's ability to produce and supply goods.
69
National debt
The stock of all past government loans that has not been paid back
70
Progressive tax
Where proportion paid increases as income increases
71
Supply-side economics
Government policy to improve the competitiveness of markets
72
Deregulation
Removing of previous regulations
73
Marketisation
The shift of provision of goods into the market sector
74
Privatisation
The movement of state-owned assets into the private sector
75
Trickle-down effect
The income paid by rich people to the poorer people they employ

Economics definitions (4 decks)

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