Macro Flashcards
Aggregate demand
Total planned spending on domestic output at a given price level.
Equation?
Actual economic growth
Increase in real GDP
Aggregate supply
Total value of output all producers are willing and able to supply at a given price level.
Appreciation
Rise in value of assets.
Austerity
Economic policy aimed at reducing a governments deficit.
Achieved by increasing tax and or reducing g spending/ future spending commitments.
Automatic stabilisers
Forms of g spending and taxation that dampen down fluctuations without any deliberate government policy
Balance of payments
Record of a country’s financial inflows and outflows trade and investment with other countries.
Balanced budget
G spending equals g revenue(tax)
Budget
Statement if a governments spending and tax revenues for the next financial year.
Deficit
G spending > taxation
Can be reduced by austerity measures or economic growth
Surplus
Tax > g spending
Business confidence
Expectations about the future of the economy
Affects business decisions with regards to capital goods = investment
Capital market
A stock of bond market where firms can raise mooney for investment.
Claimant count
The number of people claiming unemployment related benefits.
Measure unemployment - labour force survey
Consumer confidence
Expectations about future based on interest rates, incomes and jobs which affect household expenditure.
Comparative advantage
The ability to produce a product at a lower opportunity cost than other countries,regions,firms, or people.
Consumer price index
Preferred measure if inflation which excludes housing but includes all households
Circular flow of income
Flow of products and services and income between producers/ firms and households/ consumers
Draw
Closed economy
Economy operating without imports/ exports
Corporation tax
Tax on firm profits
Cost push inflation
Increases in the price level resulting from increases in costs of production.
Current account balance
A record of a country’s trade I goods, trade in services, income, and current transfers.
Look up
Cyclical trade deficit
Trade deficit which arises purely due to changes in the economy’s cycle ?
May not be relevant.
Cyclical unemployment / demand deficient un
Unemployment resulting from a lack of ad
Deflation
A sustained fall in the average price level
Deflationary fiscal policy
Measure to reduce ad
Look up
Demand management policies
Monetary and fiscal policies to influence the ad for goods and services in an economy
Demand pull inflation
Increases in the average price level beyond the capability of productive capacity to fully meet it.
Depreciation
A fall in the value of one currency compared to another
Deregulation
A removal of laws and regulation which restrict competition.
Supply side policy
Direct tax
Taxes on income and wealth of people and firms, income/ corporation tax.
Discretionary fiscal policy
Deliberate changes in g spending , borrowing and taxation to affect aggregate demand,
Discretionary incomes
Income after tax and essential bills and the addition of state benefits.
Disequilibrium
Imbalance. Curves don’t cross.
Disposable income
Income after the deduction of tax and addition of state benefits.
Dividends
A share if profits of firms which is distributed to shareholders.
Domestic trade
The exchange if products within an economy
Dumping
Exporting below domestic price or charging below cost of supply.
Economic cycle
Variations in annual rate of growth of an economy over time. Draw including Recovery Boom Slow down Recession Output gaps
Economic growth
The growth in the value of output of an economy and , in the long run, an increase in productive capacity.
Economic stability
Avoidance in volativility in economic growth, inflation, unemployment and exchange rates.
Economically inactive
Those of working age who are neither in work nor seeking work.
Exchange rates
The price of a currency in terms of another currency.
Expansionary monetary policy
Changes in the money supply ( increase), interest rates (cut), and or exchange rates (lower), designed to stimulate ad.
Fiscal drag
The reduction in disposible income that occurs if tax bands are not adjusted inline with inflation.
Fiscal policy
A gorge meets policy regarding tax and spending.
Fiscal stimulus.
Normally involving increased spending and lowering tax to jolt the economy.
Foreign direct investment.
Investment from one country into another that involves establishing operations or aquiring tangible assets.
Free trades
When trade us allowed to occur without any form of restriction such as a tariff of quota.
Frictional unemployment
Un arising when people are between jobs
Full employment. Yfe
Condition in national economy where all, nearly all persons are willing and able to work at the prevailing wages and work conditions are able to do so.
GDP
Gross domestic product
The total value of all goods and services produced by factors of production based in an economy.
Can be measured by income, output and expenditure methods.
GDP per capita
GDP / population
Geographical mobility.
The movement of an economic resource from one are to another.
Hot money flows
Flows of short term finance that moves around the world to take advantage of differences in interest rates and possible exchange rate changes.
Household wealth
The value of stocks and asset Including property Shares Savings Pension funds
Human capital
The knowledge and skills workers learn through education, training and experience.
Hyperinflation
Very high rate of inflation which causes serious economic problems and politically instability.
Hysteresis
Un generating Un by reducing the confidence and relevance of the skills of unemployed people.
Imports
Products bought from abroad
Immobility of labour
Barriers to the movement if people between areas (geographical) and jobs ( occupational)
Income distibution
The extent to which different groups of households share the total income of the country
Income elasticity of demand
The responsiveness of demand to changes in real incomes of consumers.
Indirect tax
Taxes in consumption of g and s.
Vat
Inflation
A sustained rise in the average price levels.
Inflationary noises
The distortionary effect inflation can have in price signals
Inflationary pressures
Demand and supply side pressures that can cause a rise in the general price level.
Inflation target
The CPI target if the bofe is 2%. Plus and minus 1%
Infrastructure
The transport links, communication networks, sewage systems, energy plants and other facilities necessary for the efficient running of a country.
Injections
Government spending, investment, exports.
International trade
Exchange of g and s across national boundaries.
Investment
Spending in capital goods .
Macroeconomic equilibrium
Situation where ad equals as an so there are no forces to change price level and output.
Labour force survey
All those who are actively seeking work and are available to start work , whether or not they are claiming benefits.
Measures Un
Labour supply
The number of people able, available and willing to work at prevailing wage rate,
Marginal propensity to consume
The proportion of any additional income which is spent rather than saved.
Marginal propensity to save
The proportion of any additional income which is saved rather that spent.
Market failure
Under/over consumption of product / consumption at a given price level. Keynesians believe the gov should intervene to correct it.
Menu costs
Costs involved in having to change prices as a result of inflation.
Monetary policy
Changes in the money supply, rate in interest, or exchange rate,
Mpc
Committee of the bofe that determines the rate if interestwith objective of meeting gov inflation target
Money supply
The entire quantity of country’s commercial bills, coins, loans and credit.
Multiplier
An increase in an injection into the circular flow of income causing a greater increase in ad.
Nominal GDP
GDP at current prices.
Potential economic growth
Increases in the ability of a country’s ability to produce g and s
Productivity
Output per worker per period of time
Progressive taxes
Taxes which take a greater percentage of the income of rich people than that of poor people.
Rate of interest
The cost of borrowing and return to savers.
Rate of Un
The number of people who are willing and able to workout are not in work as a percent of labour force
Rate ofte of inflation
Inflation as a percentage
Real GDP
GDP adjusted for inflation. At constant prices
Reflection army fiscal policy.
Measure designed to increase ad.
Regional Un
People who are willing and able to work but do not have work while there are vacancies in another area.
Retail price index
A weighted measure of changes in consumer prices.
Look up.
Shoe leather cost
Cost involved in moving money around during period of inflation in a bid to maintain its real value, and costs incurred when looking for a cheaper supplier.
Structural Un
A mismatch in the demand for skills as a result in the changing pattern in the industry,
Supply side policies.
Policies designed to increase the economy’s long term potential growth.
Sustainable economic growth
Economic growth achieved in a way that does not endanger the country’s ability to achieve economic growth in the future.
Tariff
Tax on imports.
Transfer payments
Money transferred from one group to another not in return for providing a g or s . Can’t be included when calculating GDP.
Trend growth
Long term path of an economy.
Draw.
Un
When people able and willing to work are not in paid employment but are receiving Un benefits.
Wealth distribution
The extent to which different groups of households share the total wealth of the country.
Withdrawals.
Leakages
Savings
Tax
Imports
