Macro Flashcards
1
Q
The best credit rating that can be given to a corporation’s bonds, effectively indicating that the risk of default is negligible.
A
AAA credit rating
2
Q
Where planned capital investment is linked positively to the past and expected growth of consumer demand or national income
A
Accelerator effect
3
Q
The rate of growth of GDP over a period of time (percentage)
A
Actual economic growth
4
Q
The relationship between the level of AD and the APL; it shows planned expenditure at any given possible APL
A
AD curve
5
Q
The total demand for all goods and services at a given price level, over a given period of time
A
Aggregate demand
6
Q
The total supply of goods and services that the country’s firms and government produce, at any given APL in a given time period
A
Aggregate supply
7
Q
Either an inflation shock or a shock to potential national output
A
Aggregate supply shock
8
Q
The state of confidence or pessimism held by consumers and businesses
A
Animal spirits
9
Q
A rise in the market value of one exchange rate against another
A
Appreciation
10
Q
Economic policy aimed at reducing a government’s deficit
A
Austerity
11
Q
Automatic fiscal changes as the economy moves through stages of the business cycle
A
Automatic stablisers
12
Q
Separate from other variables
A
Autonomous
13
Q
The average ofcurrent pricesacross the entire spectrum of goods and services produced in the economy
A
Average price level
14
Q
The proportion of income that households devote to consumption
A
Average propensity to consume
15
Q
When a large number of people suspect that a bank may go bankrupt and withdraw their deposits
A
Bank run
16
Q
Both companies and governments can issue bonds
A
Bond
17
Q
When actual rate has been above the trend rate for a considerable period of time
A
Boom
18
Q
The movement of highly skilled people from their own country to another nation
A
Brain drain
19
Q
The BRIC grouping is short hand for the rise of emerging markets
A
BRIC economics
20
Q
When the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals, making a sudden collapse likely
A
Bubble
21
Q
Occurs when government spending is greater than tax revenues
A
Budget deficit
22
Q
Expectations about the future of the economy
A
Business confidence
23
Q
A phenomenon whereby GDP around its underlying trend following a regular pattern
A
Business cycle
24
Q
A measure of output per unit of capital
A
Capacity productivity
25
Measures how much of the productive potential of the economy is being used
Capacity utilisation
26
Man-made aid to production
Capital
27
A stock or a bond market where firms can raise money for investment purposes
Capital market
28
The value of the total stock of capital inputs in the economy
Capital stock
29
Replacing workers with machines in a bid to increase productivity and reduce the unit cost of production
Capital-labour substitution
30
When countries that start off poor tend to grow more rapidly than countries that start off rich
Catch-up effect
31
The assumption that other factors of something remain constant, so don't affect it
Ceteris paribus
32
A model of the economy which shows the movement of goods and services between households and firms and their corresponding payments in money terms
Circular flow of income
33
The number of people claiming unemployment-related benefits
Claimant count
34
They believe the long-run equilibrium is always at Yfe
Classical beliefs
35
An economy operating without imports and exports
Closed economy
36
The relative advantage that one country or producer has over another
Comparative advantage
37
Constant prices tells us that the data has been inflation adjusted
Constant prices
38
Expectations about the future including interest rates, incomes and jobs
Consumer confidence
39
Products that are not used up immediately when consumed
Consumer spending
40
The government's preferred measure of inflation
Consumption
41
The relationship between consumption and disposable income (graph); it's position depends on the other factors that affect how much households spend on consumption
Consumption function
42
A tax on the profits made by companies
Corporation tax
43
An increase in the price level caused by a sustained increase in firms’ costs of production
Cost-push inflation
44
The assessment given to debts and borrowers by a ratings agency according to their safety from an investment standpoint
Credit rating
45
Small rises in the general price level over a long period
Current account
46
A period of time where import tariff rates rise
Current account deficit
47
A trade deficit that arises purely due to changes in the economy’s cycle
Cyclical tade deficit
48
Unemployment caused by a lack of aggregate demand for goods and services
Cyclical unemployment
49
When a borrower has broken the terms of a loan or other debt, for example if a borrower misses a payment
Default
50
A persistent fall in the general price level of goods and services
Deflation
51
A decline in the share of national income from manufacturing industries
Deindustrialisation
52
Unemployment that arises because of a deficiency of aggregate demand in the economy, so that the equilibrium level of output is below full employment
Demand-deficit unemployment
53
Inflation initiated by an increase in AD
Demand-pull inflation
54
A fall in the market value of one exchange rate against another
Depreciation
55
Used to describe a severe recession which may become a prolonged downturn in the economy
Depression
56
Reducing barriers to entry in order to make a market more competitive
Deregulation
57
Countries lacking a high degree of industrialisation and/or other measures of development
Developing country
58
People often out of work for a long time who give up on job search
Discouraged workers
59
Deliberate attempts to affect aggregate demand using changes in government spending, direct and indirect taxation and borrowing
Discretionary fiscal policy
60
Disposable income adjusted for spending on essential bills
Discretionary income
61
A fall in the rate of inflation
Disinflation
62
Gross income less income tax and national insurance contributions plus cash welfare benefits
Disposable income
63
When an economy goes into recession twice without having undergone a full recovery in between
Double-dip recession
64
When actual rate is still above the trend rate, but falling
Downturn
65
When a producer in one country exports a product to another at a price below the price it charges in its home market or below the costs of supply
Dumping
66
The concept that people’s demands have exceeded the Earth’s ability to cope with the rising consumption of its resources
Ecological debt
67
Variations in the annual rate of growth of an economy over time
Economic cycle
68
An increase in the real value of goods and services produced in a country or area as measured by the annual % change in real national output
Economic growth
69
Unpredictable events in the economy
Economic shocks
70
When indicators don't change much from one year to another
Economic stability
71
Those who are unemployed and actively seeking employment
Economically active
72
Those who are of working age but are neither in work nor actively seeking work
Economically inactive
73
The financial markets of developing countries
Emerging markets
74
No tendency for change in real GDP or APL when at equilibrium
Equilibrium
75
The rate at which one currency can be exchanged for another
Exchange rate
76
A relaxation of monetary policy means an attempt to use an expansionary monetary policy to boost aggregate demand, output and jobs
Expansionary monetary policy
77
How we expect the future to unfold
Expectations
78
The value of the goods and services purchased by households and by government, investment in machinery and buildings
Expenditure measure of GDP
79
Policies that are designed to ‘switch’ expenditure from imports to domestically produced goods in order to improve the balance of payments and stimulate GDP
Expenditure-switching policies
80
Sales from selling goods and services overseas
Export revenue
81
A strategy for achieving rapid economic growth through the promotion of export activity
Export-led growth
82
Goods and services sold to consumers in overseas markets
Exports
83
For consumers the main financial assets are property, pensions, equities, unit trusts and cash
Financial assets
84
Changes in monetary policy or fiscal policy designed to gradually manage the level of aggregate demand and prices
Fine-tuning
85
Decisions by a government to reduce the amount of government borrowing
Fiscal austerity
86
When government expenditure is higher than the revenue from tax receipts in a particular year
Fiscal deficit
87
A government's policy regarding taxation and public spending
Fiscal policy
88
Many governments seek to maintain a degree of balance between tax revenues and public sector spending
Fiscal stability
89
Government measures, normally involving increased public spending and lower direct or indirect taxation
Fiscal stimulus
90
A prediction made about the likely future performance of an economy
Forecast
91
Investment from one country into another that involves establishing operations or acquiring tangible assets
Foreign debt investment
92
When trade is allowed to occur without any form of restriction
Free trade
93
A level of national output where all available factor inputs are fully employed
Full capacity output
94
When there enough job vacancies for all the unemployed to take work
Full employment
95
A measure of the extent to which groups of households receive less than an equal share of income
Gini coefficient
96
The deepening of relationships between countries of the world reflected in an increasing level of overseas trade and investment
Globalisation
97
A rule introduced by the former Labour government which says that borrowing on state provided goods and services should be zero over the course of one economic cycle
Golden rule
98
The total stock of unpaid debt issued by a government
Government debt
99
Spending and investing carried out by the government at a national and local level; often politically motivated
Government expenditure
100
A measure of the economic activity carried out in the domestic economy over a period of time
Gross domestic product (GDP)
101
GDP plus the net income from abroad
Gross national income (GNI)
102
A reduction in the value of a troubled borrower's debts
Haircut
103
A full-scale recession shown by a decline in real national output
Hard landing
104
Money that flows freely and quickly around the world looking to earn the best rate of return
Hot money
105
The value of assets
Household wealth
106
Investment in education and training to increase the quality of the labour force and to make people more flexible in a changing world of work
Human capital
107
An index to assess comparative levels of development in countries
Human development index
108
When the change in APL is excessively high (more than 20%)
Hyper inflation
109
When a sustained period of low aggregate demand can lead to permanent damage to the supply side of the economy
Hysteresis
110
Barriers to the movement of people between areas and between jobs
Immobility of labour
111
Goods and services bought to domestic customers and businesses overseas
Imports
112
People who are either working for firms or other organisations, or self-employed
In employment
113
A flow concept: the amount of income that is earned during a period of time
Income
114
Responsiveness of demand to a change in the real income of consumers
Income elasticity
115
A device for comparing the value of a variable in one period or location with a base observation
Index number
116
A sustained increase in the general price level for goods and services
Inflation
117
The rate of increase of consumer prices expected by consumers. Expectations can influence spending and saving decisions
Inflation expectations
118
The Bank of England has a CPI inflation target
Inflation target
119
Demand and supply-side pressures that can cause a rise in the general price level.
Inflationary pressures
120
The transport links and communications networks essential for the efficient functioning of a country and its economy
Infrastructure
121
Where money flows into the circular flow in the form of investment, government spending and exports
Injections
122
Changes to products or production processes
Innovation
123
An organisation of 186 countries, promoting global monetary cooperation, financial stability, international trade, employment and sustainable economic growth
International Monetary Fund
124
A nation’s stock of foreign currency and gold
International services
125
These consist of materials and supplies which are stored for use in production
Inventories
126
Spending on capital goods carried out by firms within an economy
Investment
127
Interest, profits and dividends from assets owned and located overseas
Investment income
128
The process by which workers find appropriate jobs given their tastes and skills
Job search
129
The belief that the state can directly stimulate demand in a stagnating economy
Keynesian economics
130
Unemployment caused by a lack of aggregate demand in the economy
Keynesian unemployment
131
A measure of output per worker
Labour productivity
132
Cut backs in employment often seen in a slowdown or a recession
Labour shedding
133
When businesses find it difficult to recruit the workers they need
Labour shortages
134
The number of people able, available and willing to work at prevailing wage rates
Labour supply
135
Indicators which tend to follow economic cycles
Ladding indicators
136
Indicators which predict future economic trends
Leading indicators
137
The use of borrowed funds to increase your capacity to spend or invest
Leveraging
138
Used by banks world-wide to determine the rate at which they lend to each other
LIBOR
139
Used by banks world-wide to determine the rate at which they lend to each other
Life-cycle model
140
The ease with which something can be converted to cash with little loss of value
Liquidity
141
When very low interest rates cease to have a strong effect on aggregate demand
Liquidity trap
142
A curve showing the productive potential of the economy; it shows how much real GDP (y) can be produced over a period of time, with a given level of factor inputs.
Long-run AS curve
143
An increase in the productive capacity of the economy
Long-run economic growth
144
An increase in the productive capacity of the economy
Macroeconomic performance
145
Proportion of any change in income that is spent rather than saved
Marginal propensity to consume
146
Proportion of any change in income that is spent on overseas products
Marginal propensity to import
147
Proportion of any change in income that is saved rather than spent
Marginal propensity to save
148
Proportion of additional income that is taxed
Marginal propensity to tax
149
Proportion of additional income that is withdrawn from the circular flow
Marginal propensity to withdraw
150
The rate of tax on the next unit of income earned
Marginal rate of tax
151
Calculated by adding together the unemployment rate and the rate of inflation
Misery index
152
Decisions made by the government regarding monetary variables
Monetary policy
153
Bank of England committee of 9 people meets every month to set interest rates
Monetary Policy Committee
154
Changes in monetary policy designed to increase aggregate demand including lower policy interest rates and measures to increase the supply of credit
Monetary stimulus
155
The entire quantity of a country's commercial bills, coins, loans and credit
Money supply
156
When an insured party decides to take higher risks because they perceive their losses will be covered
Moral hazard
157
If there is an initial injection into the economy then the final increase in aggregate demand and real GDP will be greater
Multiplier effect
158
"A free trade area agreement signed by the US,
| Canada and Mexico"
NAFTA
159
A government's total outstanding debt
National debt
160
The total amount of money that represents income within the economy
National income
161
Bringing a privately owned asset such as a company under state control
Nationalisation
162
When the value of an asset falls below the debt left to pay on that asset
Negative equity
163
An interest rate that is below zero
Negative interest rate
164
Our total exports minus our total imports
Net exports
165
Gross investment minus an estimate for capital depreciation
Net investment
166
When the number of migrants coming into a country is greater than those leaving
Net inward migration
167
The balance between the value of exports and imports
Net trade
168
Monetary value of all goods and services produced expressed at current prices
Nominal GDP
169
Values of economic variables based on current prices, taking no account of changing prices through time
Nominal values
170
The annual growth of wages unadjusted for inflation
Nominal wage growth
171
Sustained growth of real national output whilst maintaining price stability
Non-inflationary growth
172
An economy that is active in world (international) trade
Open economy
173
The benefit or value of the next best alternative that has been sacrificed.
Opportunity cost
174
Difference between actual and potential national output
Output gap
175
Value of the goods and services produced by all sectors of the economy
Output measure GDP
176
Assets which are owned in overseas countries and
| which might generate a flow of income
Overseas assets
177
If people save more in a recession, it will reduce consumption and thus AD will fall, impeding economic growth and eventually lowering the general level of savings
Paradox of thrift
178
A reduced rate of Corporation Tax applied to profits from patents
Patent box
179
The high point of the economic cycle beyond which a recession starts
Peak
180
Fund that pools employees' pension benefits and holds them so that they can be paid at retirement
Pension fund
181
Income per head of the population
Per capita incomes
182
A statistical relationship between unemployment and inflation
Phillips curve
183
When a given change in interest rates affects different groups or different countries to a lesser or greater degree
Policy asymmetry
184
An expansion in the productive capacity of the economy
Potential economic growth
185
Saving because of fears of a loss of real income or employment
Precautionary saving
186
When there is low inflation and the price changes that do occur have little impact on day-to-day decisions of people
Price stability
187
Productive capacity of the economy
Productive potential
188
A measure of efficiency
Productivity
189
Restricting trade through tariffs and other forms of import controls
Protectionism
190
The buying power of a unit of currency. It is inversely related to the rate of inflation
Purchasing power
191
The introduction of new money into the national supply by a central bank
Quantitative easing
192
A physical limit on the quantity of a good that can be imported into a country
Quota
193
Income after taxes and welfare benefits, adjusted for the effects of inflation
Real disposable income
194
A macroeconomics measure of the economic output changed for inflation or deflation
Real GDP
195
Nominal income adjusted for price changes, expressed at constant prices
Real income
196
The nominal rate of interest adjusted for inflation
Real interest rate
197
Values of economic variables, taking account of changing prices through time
Real values
198
The nominal wage adjusted for the effects of inflation
Real wage
199
Two consecutive quarters of negative economic growth
Recession
200
A phase after a recession when real GDP starts to increase and unemployment begins to fall
Recovery
201
Making someone redundant is to end their employment
Redundancy
202
An economy with an inflation rate, which is lower than comparable economies
Relative deflation
203
Sending of money to people in another country
Remittances
204
The official 'base' rate of interest that is set by the Monetary Policy Committee
Repo type
205
Similar to the CPI but includes mortgage repayments and some taxes, and excludes the top 4 per cent of earners
Retail price index
206
Exhibiting a dislike of uncertainty, often seen in a recession
Risk averse
207
Deferred spending; disposable income that is not spent
Saving
208
The percentage of disposable income that is saved rather than spent
Saving ratio
209
Unemployment that arises in seasons of the year when demand is relatively low
Seasonal unemployment
210
A curve showing how much output firms would be prepared to supply in the short run at any given APL
Short-run AS curve
211
An increase in real GDP
Short-run economic growth
212
A fall in the rate of growth of an economy but not a full-scale recession
Slowdown
213
A sustained decrease in real GDP and a persistent rise in unemployment
Slump
214
A slowdown in economic activity but which does not result in a recession
Soft landing
215
Debt issued by or guaranteed by a government
Sovereign debt
216
When a business is not making full use of its available capacity
Spare capacity
217
A combination of slow growth and rising inflation
Stagflation
218
External value of sterling calculated using a weighted index of a basket of currencies
Sterling exchange rate index
219
Monetary policy or fiscal policy aimed at encouraging higher growth and inflation
Stimulus
220
The size of a fiscal (budget) deficit adjusted to take account of the effects of changes in the economic cycle
Structural budget deficit
221
A trade deficit that arises due to supply-side weaknesses rather than a change in GDP or currency
Structural trade deficit
222
When people are unemployed as they do not have the skills needed by the industries that are currently growing in the economy
Structural unemployment
223
Growth that meets the needs of the present without compromising the ability of future generations to meet their own needs
Sustainable growth
224
A target is an objective of government policy
Target
225
A tax on imported products
Tariff
226
Compulsory payments to the government
Taxation
227
When demand for labour is high and there are shortages of labour
Tight labour market
228
The time it takes for one change
Time lags
229
The average productivity of all factors, measured as the total output divided by the total amount of inputs used
Total factor productivity
230
Loans that may not be repaid
Toxic debt
231
When a country imports a greater value of goods and services than it exports
Trade deficit
232
Implies that choices have to be made between different objectives of economic policy
Trade-off
233
A conflict over finite resources between individual interests and the common good which can lead to irreversible damage to the stock of natural resources available to current and future generations
Tragedy of the Commons
234
How a change in interest rates affects the various sectors of the economy
Transmission mechanism
235
The long run average growth rate
Trend growth
236
The low point of the economic cycle beyond which a recovery starts
Trough
237
A situation where an economy is running both a fiscal deficit and also a deficit on the current account of the balance of payments
Twin deficits
238
When workers are willing to supply more hours of work than their employers are prepared to offer
Under-employment
239
The state of being economically active but not in employment
Unemployment
240
When the prospect of the loss of unemployment benefits dissuades those without work from taking a new job
Unemployment trap
241
Labour costs per unit of output
Unit wage costs
242
Credit not secured by another asset
Unsecured credit
243
Situation arising when an individual chooses not to accept a job at the going wage rate
Voluntary unemployment
244
Where workers bid for higher wages because they have seen their real income eroded by rising prices
Wage price spiral
245
A stock concept: the accumulation of assets, such as property or shares
Wealth
246
The supposed link between changes in wealth and household spending
Wealth effect
247
Where money flows out of the circular flow in the form of savings, taxation and imports
Withdrawals
248
People who are economically active - either in employment or unemployed
Workforce
249
A source of financial and technical assistance to developing countries
World bank
250
Oversees trade agreements, negotiations and disputes between member countries
World Trade Organisation
251
An employment contract under which the employee is not guaranteed work and is paid only for work carried out
Zero-hours contract
252
Weak and inefficient companies which are able to survive thanks to low interest rates and a supposedly more tolerant attitude to corporate borrowers by banks
Zombie companies
