Macro Topic 1 definitions

Question 1

availability of credit

Answer 1

funds available for firms and households to borrow

Question 2

base year

Answer 2

the first year in an economic or financial index

Question 3

illegal informal market

Answer 3

economic activities that fall below the governments radar

Question 4

claimant account

Answer 4

a method of measuring unemployment by counting all those who claim the jobseekers allowance and other unemployment related benefits

Question 5

consumer prices index (CPI)

Answer 5

official measures used to calculate the rate of consumer price inflation, using a basket if common goods

Question 6

credit crunch

Answer 6

occurs when there is low availability of credit in the economy

Question 7

economic shock

Answer 7

unexpected events and their effects on economies; may demand side or supply side

Question 8

exchange rate

Answer 8

the price of a currency measured in terms of another currency

Question 9

exports

Answer 9

domestically produced goods and services sold to residents of other countries

Question 10

full employment

Answer 10

all those willing and able to work are able to find jobs

Question 11

gross national income (GNI)

Answer 11

sum of value added by all producer who reside in a nation, plus product taxes not included in the value of output, plus receipts of primary income from abroad.

Question 12

gross national product (GNP)

Answer 12

market value of all products produced per annum by the labour and property supplied by the citizens of one country

Question 13

imports

Answer 13

non domestically produced goods and services sold to residents of this country

Question 14

index numbers

Answer 14

numbers allowing accurate comparisons over time to be made. the base year value is typically 100.

Question 15

inflation target rate

Answer 15

the CPI inflation target rate set by the government, which the Bank of England attempts to achieve; currently 2%

Question 16

job seekers allowance (JSA)

Answer 16

unemployment related benefit

Question 17

labour force survey

Answer 17

a quarterly survey of UK households, recording information on the personal employment circumstances of the respondents

Question 18

liquidity

Answer 18

the ease with which an asset can be turned into cash without loss or delay

Question 19

macroeconomics

Answer 19

involves the study of the whole economy at the aggregate level

Question 20

macroeconomic stability

Answer 20

occurs when there is low volatility of key macroeconomic indicators

Question 21

marginal propensity to consume (MPC)

Answer 21

the proportion of an increase in disposable income that is spent on consumer goods

Question 22

national wealth

Answer 22

the stock of all goods with the value in an economy

Question 23

per capita

Answer 23

per person/ per head

Question 24

performance indicator

Answer 24

provides information used to judge success or failure of a government policy

Question 25

policy instrument

Answer 25

tool or set of tools used to try snd meet a policy objective

Question 26

policy objectives

Answer 26

target or goal policy-makers aim to hit

Question 27

price index

Answer 27

an index number showing the extent to which a set of prices has changed in comparison to the prices in the base year

Question 28

purchasing power parity (PPP)

Answer 28

adjustments of exchange rates to reflect the actual purchasing power of a currency

Question 29

retail prices index (RPI)

Answer 29

an older measure used to calculate the rate of consumer price inflation

Question 30

wealth

Answer 30

stock of assets