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economics > macro economics chapter 40-50 > Flashcards

macro economics chapter 40-50 Flashcards

1
Q

deflation

A

rate of decrease of the general price level and the corresponding raise in value of money, it has become more common recently as a number of countries have experinacd falls in their general price levels

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2
Q

disinflation

A

occures when prices are rising but at a decreasing rate

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3
Q

who is deinflation bad for

A

borrowers

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4
Q

deinflationairy policy

A

action by government or other authorizes implemented with the intention of reducing aggregate demand

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5
Q

demand pull inflation

A

is a rise in the genrel price level that reults from an incrase in aggragate demarnd

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6
Q

cost push inflation

A

arisses from firms facing increased costs of production and originates in the supply side of the economy

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7
Q

depreciation

A

is a fall in the value of a countrys currancy against other currancys

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8
Q

international trade

A

is the sale of goods and services across the national frontiers

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9
Q

the theory of comparative advantage

A

states that even relatively innificant economies can benefit from international trade

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10
Q

an emerging market

A

describes an economy that has a low income per capita but is enjoying high rates of economic growth

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11
Q

deflation

A

the decrease in the general price level, for deflation to occur the average level of price must be falling

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12
Q

when does deflation occur

A

periods of very low or stagnent growth

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13
Q

an open economy

A

one in witch international trade represents a high proportion of its GDP, the UK is an increasingly open economy

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14
Q

imports

A

imports are products brought by households, firms and the government in one country that are produced in another country

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15
Q

exports

A

products produced in the ‘home’ economy and sold to customers overseas.

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16
Q
  1. benefits of international trade
A
  1. more competitive industries
  2. innovation
  3. benefits of scale
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17
Q

balance of payments

A

records the finnancial and reading transactions of the UK, with the rest of the world. these transactions are recorded in three main accounts in the balance of payments
- current account
-capital account
-finnanical account

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18
Q

the current account

A

the current account comprises the trade in goods and services as well as flows of primary income and secondary income. the difference in the monetary value of inflows and outflows on these accounts is known as the current account balance.

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19
Q

the capital account

A

the capital account compromises two components, capital transfure between countries and the sale and purchase of certain assess such as franchises, leases and copyrights.

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20
Q

the financial account

A

records transactions that result in a change in ownership of financial assets between uk residence and non residence. exampels include the sale and purchase of shares in foreign business by people who live in the UK.

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21
Q

what are the four components of the current account balance of payments

A
  1. trade in goods
  2. trade in services
  3. investment income
  4. total current transfures
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22
Q

the current account surplus

A

exists when inflows of currency recorded on the current account exceeds outflows over some period of time

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23
Q

the current account deficit

A

exists when inflows of a currency recorded on the current account are smaller then out flows over some period of time

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24
Q

inflows of currency

A

-exports of goods and services
-income from investments overseas
-transfures into the uk

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25
Q

outflows of currency

A

-imports of goods and services
- investment income paid overseas
-transfures out of the uk

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26
Q

influences on the current account of the balance of payments

A

internal factors
1. productivity
2.macroeconomic performance
external factors
1. level of economic activity in other countries
2. high rates of economic growth can stimulate a countries export sales
3. polices of foreign governments with regarded to trade can influence the current account balance of other countries

27
Q

import penetration

A

measures the value of imports as a persentage of consumption

28
Q

a positive output gap

A

occurs when actual GDP exceeds the long term trend of GDP, for example durin the peak stages of the economic cycle, this is associated with high levels of employment and inflationary pressure

29
Q

negative output gap

A

exists when the actual level of GDP is lower then the long term trend, this type of output gap can be seen to exits in the trough phase and is normal accompanies by rising levels of unemployment

30
Q

fiscal

A

-government and tax

31
Q

monetary

A
  • bank and intrest
32
Q

the balance of trade

A

is the part of the current account of the balance of payments and measures the earnings from exports minus the expenditure on imports

33
Q

monetary policy

A

actions taken by the government (or the central bank acting on its behalf) to manipulate intrets rates, the supply of money and credit and the exchange rate to achieve its macro economic objectives

34
Q

central bank

A

responsible for managing the monetary system in the economy

35
Q

the bank rate

A

is the rate of intrest at which the bank of England is willing to lend money short term to other financial institutions

36
Q

monetary policy instruments

A

tools available to a central bank to influence money market and the credit conditions in the economy, such as charging intrest rates

37
Q

credit

A

general term for borrowing, it is money that is a bank or other organization allows a person or Organization to use and repay at a later date.

38
Q

three main elements of monetary policy

A
  1. changing the bank rate of intrest, which influence the level of intrest rates throughout the economy
  2. controlling the supply of money within the economy
  3. influencing the value of the pound stearling in terms of other currencies
39
Q

how many members do the monetary policy commiti have

A

9

40
Q

quantitive easing

A

the bank of England has created money by buying government bonds, from banks and other financial instutions with electronic cash that did not exist before

41
Q

main of quantitive easing

A

to increase bank leanding and the levels of consumption and investment

42
Q

monetary policy committee

A

is a group of nine experts in Monterey issues who meet monthly to make descions about the UK bak rate

43
Q

liquidity

A

measures the proportion of a business assets that are held in a form that can easily be converted into cash

44
Q

the real interest rate

A

the rate of interest adjusted for inflation to show the true cost of borrowing money

45
Q

discretionary income

A

equal to a households disposable income minus expenditure on essentail terms including housing costs e/g mortgage, rent, food

46
Q

hot money

A

refuses to fund that flow between financial markets as investors attempt to earn the highest short term intrest rate possible

47
Q

fiscal policy

A

government manipulation of expenditure, taxation, and budget balance to manage the economy

48
Q

budget balance

A

difference between government spending and revenue over the financial year.

49
Q

the treasury

A

is the UK government economic and finance ministry responsible for public spending and setting the direction of the UK’s economic policy.

50
Q

Austerity

A

describes government polices to reduce expenditure and increase revenue from taxation durin periods of budget deficit.

51
Q

taxation

A

payment that is to be made to the government or other authorities by households, firms or other organisations.

52
Q

fiscal drag

A

occurs when inflation results in taxpayers receiving higher incomes and moving into higher income tax bands, hence paying a higher persentage of income as tax.

53
Q

national debt

A

is the total of all past government borrowing that has never been repaid.

54
Q

discretionary fiscal policy

A

policy is the deliberate manipulation of the budget to achieve macro economic aims

55
Q

automatic stabilisers

A

are elements of fiscal policy that occur independently as the economy moves through its economic cycle

56
Q

demand management

A

is the use of macroeconomic policies to manipulate an economies level of aggregate demand

57
Q

supply side policy

A

micro-economic policies aimed at making markets and industries operate more efficiently and contribute to a faster underlying-rate of growth of real national output.

58
Q

supply side approvments

A

actions taken primarily by firms to increase the efficiency of their operations and thereby raises output

59
Q

occupational immobility of labour

A

exists when workers cannot transfure easily to employment in a diffrent type of job

60
Q

geographical immobility of labour

A

occurs when workers cannot move freely to take employment in a new location

61
Q

trade union

A

A trade union is an organisation made up of members (a membership-based organisation) and its membership must be made up mainly of workers. One of a trade union’s main aims is to protect and advance the interests of its members in the workplace. Most trade unions are independent of any employer.

62
Q

industrial policy

A

refutes to government intervention that seeks to support or develop some industies to enhance economic growth

63
Q

privatisation

A

transfure of state owned organisation to the private sector where they are owned by individuals and private firms

64
Q

deregulation

A

reduction of the extent of state or government controll over a business activity

economics (6 decks)

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