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economics multiple choice > macro definitions > Flashcards

macro definitions Flashcards

1
Q

Accelerator effect

A

The relationship between the change in new investment and the rate of change of national income

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2
Q

aggregate demand

A

total planned expenditure in the economy

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3
Q

aggregate supply

A

total value of goods and services supplied in the economy

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4
Q

balance of payments

A

a record of a country’s international transactions over a year

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5
Q

balance of trade

A

visible exports minus visible imports

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6
Q

balanced budget

A

where government receipts equal government spending in a fiscal year

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7
Q

broad money

A

money half in banks and building societies that is not immediately accessible

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8
Q

budget deficit

A

where the government spending exceeds spending receipts in a fiscal year

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9
Q

budget surplus

A

where the government receipts exceeds government spending in a fiscal year

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10
Q

circular flow of income

A

model explaining the equilibrium level of national income

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11
Q

consumption

A

spending by domestic households on goods and services

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12
Q

cost push inflation

A

where increased costs of production result in firms increasing their prices leading to an increase in general price level

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13
Q

CPI

A

consumer price index, used to measure inflation

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14
Q

cyclical unemployment

A

demand-deficient unemployment resulting from a downturn in the economic cycle

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15
Q

deflation

A

A situation where the general price levels fall.

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16
Q

Demand management

A

Using monetary and fiscal policy to control aggregate demand to minimise fluctuations in the economic cycle.

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17
Q

Demand-pull inflation

A

Where aggregate demand exceeds aggregate supply leading to a price level increase.

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18
Q

Deregulation

A

the process of removing government controls from markets

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19
Q

Discretionary fiscal policy

A

The deliberate manipulation of government spending and taxation to influence the economy.

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20
Q

Disposable income

A

Income available to households after the payment of income tax and national insurance contributions

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21
Q

Economic cycle

A

The tendency for economic growth to fluctuate over time.

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22
Q

Economic growth

A

An increase in the productive capacity of a nations over time.

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23
Q

Exchange rate

A

The price of one currency expressed in terms of another.

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24
Q

Exports

A

Goods and services sold abroad.

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25
Q

Fiscal policy

A

control of the economy via the use of taxation and government spending

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26
Q

Frictional unemployment

A

People between job, i.e engaged in job search

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27
Q

GDP

A

gross domestic product-The total value of goods and services produced in the economy

28
Q

Geographical immobility

A

Where workers find it difficult to move where employment opportunities may be

29
Q

Globalisation

A

The ability to produce goods anywhere in the world and sell them in any country

30
Q

Hot money

A

Money that is liable to rapid transfer from one country to another.

31
Q

human capital

A

The skills, abilities, knowledge and motivation of labour

32
Q

Imports

A

Purchases of goods and services from abroad

33
Q

Income

A

a flow of income to a factor of production over a period of time e.g salary

34
Q

Inflation

A

A persistent increase in the general price level

35
Q

Injection

A

Money that originates outside the circular flow of income and so boosts national income

36
Q

Interest rate

A

The cost of borrowing, the reward for saving or the opportunity cost of spending.

37
Q

Investment

A

spending by firms on new capital equipment

38
Q

Macroeconomics

A

Study of the economy as a whole

39
Q

Monetary policy

A

controlling the economy via changes in interest rates and the money supply

40
Q

Mortgage

A

loan to buy a property

41
Q

MPC

A

monetary police committee of the bank of England, made up of economists and bankers who meet monthly to decide whether of not to alter the base rate of interest.

42
Q

Money supply

A

The total amount of money in the economy

43
Q

multiplier effect

A

where an increase of decrease in spending leads to a larger than proportional change in national income

44
Q

Narrow money

A

Notes, coins and balances available for current transactions

45
Q

Negative equity

A

Where the value of one’s house is lower than the outstanding mortgage

46
Q

Negative output gap

A

Where the economy is producing less than its trend output

47
Q

Nominal

A

not adjusted for inflation

48
Q

Occupational immobility

A

where workers find it difficult to secure ‘new’ jobs as patterns of demand and employment change, as they lack the necessary skills

49
Q

Participation rate

A

Proportion of the country’s working age population that makes up the labour force

50
Q

Positive output gap

A

When actual GDP exceeds the trend rate of GDP, increasing inflationary pressure

51
Q

Privatisation

A

Sale of government owned assets to the private sector

52
Q

Real GDP

A

GDP adjusted for the effects of inflation

53
Q

Recession

A

2 or more quarters of negative growth of GDP

54
Q

Structural unemployment

A

Unemployment caused by a change in the pattern of demand in an economy

55
Q

Subsidy

A

A payment made by government to producers to encourage greater production of a good or service

56
Q

Supply-side policies

A

A range of measures designed to increase AS by improving the efficiency of markets

57
Q

Tariff

A

A tax on imports

58
Q

Transmission Mechanism

A

How changes in the base rate of interest influence the components of AD.

59
Q

Unemployment

A

Those of a working age who are willing and able to work who do not currently have a job

60
Q

Unemployment trap

A

Where individuals receive more in benefit payments than they would in income in employment

61
Q

Voluntary unemployment

A

Workers not prepared to take a job at current wage rates

62
Q

Wealth

A

A stock of owned assets, e.g housing property, shares

63
Q

Wealth effect

A

Where a rise in the value of household wealth encourages consumers to spend more and save less

64
Q

Withdrawals

A

Money taken out of the circular flow of income, which reduces national income

65
Q

productive capacity

A

Maximum possible output of an economy

66
Q

real income

A

Real the income of individuals or nations after adjusting for inflation. It is calculated by subtracting inflation from the nominal income.

67
Q

recovery

A

A period of increasing business activity signaling the end of a recession.

economics multiple choice (6 decks)

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