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Economics Edexcel A A level > Macroeconomic key terms > Flashcards

Macroeconomic key terms Flashcards

1
Q

Actual growth

A

Economic growth measured by changes in real GDP

Investment in capital goods

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2
Q

Aggregate demand (AD)

A

The total level of demand in an economy at any given price at a moment in time

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3
Q

Aggregate supply (AS)

A

The total amount of output in the economy at any given price at a moment in time

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4
Q

Animal spirits

A

The level of confidence of business owners

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5
Q

Balance of payments

A

A record of all financial dealings over a period of time between economic agents of one country and another

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6
Q

Base year

A

A year chosen as a good comparison in series of data when building an index; it is automatically given an index figure of 100

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7
Q

Boom

A

The peak of the business cycle, when growth is high

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8
Q

Budget

A

Where the government lays out their spending and taxation plans

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9
Q

Budget deficit

A

When the government spends more money than it receives

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10
Q

Budget surplus

A

When the government receives more money than it spends

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11
Q

Circular flow

A

A model of the economy which shows the flow of goods and services, the factors of production and money around the economy

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12
Q

Budget deficit

A

When the government spends more money than it receives

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13
Q

Budget surplus

A

When the government receives more money than it spends

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14
Q

Circular flow

A

A model of the economy which shows the flow of goods and services,
the factors of production and money around the economy

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15
Q

Claimant count

A

A measure of unemployment; the number of people receiving benefits for being unemployed

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16
Q

Consumer Price Index (CPI)

A

Official measure used to calculate the rate of inflation, using a weighted basket of goods

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17
Q

Consumption

A

Consumer spending on goods and services

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18
Q

Cost push inflation

A

Inflation caused by a decrease in AS

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19
Q

Current account

A

A record of the payments for the purchase and sale of goods and services, as well as income and transfers

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20
Q

Current account deficit

A

When more money leaves the country than enters, so the current account is negative

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21
Q

Current account surplus

A

When more money enters the country than leaves, so the current account is positive

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22
Q

Cyclical unemployment

A

Unemployment caused by a lack of AD

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23
Q

Deflation

A

A persistent fall in prices of goods and services

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24
Q

Deflationary policy

A

Fiscal or monetary policy which is aimed at reducing AD

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25
Q

Demand pull inflation

A

Inflation caused by an increase in AD

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26
Q

Depreciation

A

The reduction in the value of machinery overtime

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27
Q

Direct tax

A

Taxes paid straight to the government by the individual taxpayer

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28
Q

Disinflation

A

A reduction in the rate of inflation

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29
Q

Disposable income

A

The money consumers have left to spend, after taxes have been taken away and benefits added

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30
Q

Economic growth

A

An increase in the long term productive potential in the economy; an increase in the amount of goods and services which are produced, measured by an increase in real GDP

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31
Q

Employed

A

Someone who does more than 1 hour of paid work a week or is temporarily away from work, on a government supported training scheme or does a minimum of 15 hours unpaid work for their family business

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32
Q

Expansionary policy

A

Fiscal or monetary policy which is aimed at increasing AD

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33
Q

Exports

A

Goods or services sold abroad. This brings income into the country

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34
Q

Export-led growth

A

Economic growth arising from an increase in exports

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35
Q

Fiscal policy

A

The use of borrowing, government spending and taxation to manipulate
the level of AD and improve macroeconomic performance

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36
Q

Frictional unemployment

A

Unemployment caused when people move between jobs and enter the job market

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37
Q

Gross Domestic Product (GDP)

A

The value of goods and services produced in a country over a given period of time

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38
Q

GDP per capita

A

Total GDP divided by the population

39
Q

Gross investment

A

Investment both to replace old machinery that has depreciated and to create/buy new ones

40
Q

Gross National Income (GNI)

A

The value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends

41
Q

Gross National Product (GNP)

A

The value of goods and services produced by citizens of a country, whether they live in the country or not.

42
Q

Government spending

A

Spending by the government for the provision of goods and services

43
Q

Imports

A

Goods and services bought from abroad that takes income out of the country.

44
Q

Inactive

A

Those neither employed nor unemployed; those not participating in the job market

45
Q

Income

A

A flow of assets

46
Q

Index number

A

Numbers allowing accurate comparisons over time to be made. The
base year value is typically 100

47
Q

Indirect tax

A

Tax where the person charged with paying the money to the government is able to pass on the cost to someone else

48
Q

Inflation

A

The general rise in prices of goods and services that erodes the purchasing power of money

49
Q

Injection

A

Spending power entering the circular flow of income resulting from investment, government spending and exports

50
Q

Interventionist supply side policies

A

Policies designed to correct market failure, where the government intervenes in the market

51
Q

Investment

A

Spending by businesses on capital goods, which leads to the creation of real goods

52
Q

Labour Force Survey

A

A measure of unemployment which surveys people to class them as unemployed, employed or inactive under the International Labour Organisation (ILO) definitions

53
Q

Living standards

A

The quality of life enjoyed by people in a country

54
Q

Long run

A

When all factors of production are variable

55
Q

Long run aggregate supply (LRAS)

A

The total output an economy can produce when operating at full output

56
Q

Long run trend growth rate

A

The average sustainable rate of economic growth over a period of time

57
Q

Marginal propensity to consume

A

The willingness of consumers to spend in an economy.

Or: The proportion of an increase in income spent on consumption.

change in consumption divided by change in income

58
Q

Marginal propensity to import

A

The proportion of an increase in income spent on imports

59
Q

Marginal propensity to save

A

The proportion of an increase in income that is saved

60
Q

Marginal propensity to tax

A

The proportion of an increase in income that is taken away in tax

61
Q

Marginal propensity to withdraw

A

The proportion of an increase in income that is withdrawn from the
circular flow

62
Q

Market-based supply-side policies

A

Policies which are designed to remove anything which prevents the free market system working efficiently

63
Q

Monetary policy

A

The attempts of the central bank/regulatory authority to control the level of AD by altering base interest rates or the amount of money in the economy

64
Q

Monetary supply

A

Stock of money in the economy

65
Q

Multiplier

A

An increase in an injection will lead to an even greater increase of national income.

  1   =    1 (1-MPC) MPW
66
Q

National expenditure

A

The value of spending by households on goods and services

67
Q

National income

A

The value of income paid by firms to households in return for land, labour, capital and enterprise

68
Q

National output

A

The value of the flow of goods and services from firms to households

69
Q

Negative output gap

A

When GDP is lower than predicted; the economy is producing below full output

70
Q

Net exports

A

Exports - imports

71
Q

Net investment

A

Investment adjusted for depreciation; gross investment minus depreciation

72
Q

Nominal GDP

A

GDP which does not take inflation into account; GDP at current prices

73
Q

Output gap

A

The difference between the long term trend rate of growth and actual growth

74
Q

Positive output gap

A

When GDP is higher than predicted; the economy is producing above full output

75
Q

Potential growth

A

A change in the productive potential of the economy

76
Q

Purchasing power parity

A

Exchange rate of one currency to another that compares the cost of living in different countries through comparing a typical basket of goods

77
Q

Quantitative easing

A

When the central banks buys assets in exchange for money in an attempt to increase the money supply

78
Q

Real GDP

A

GDP which is re-based back to a specific year. (Takes into account of inflation)

79
Q

Delete - ignore

A

Delete - ignore

80
Q

Recession

A

The trough of the business cycle, when growth is low. The government defines it as where real GDP falls in at least two successive quarters

81
Q

Retail Price Index (RPI)

A

An old measure of inflation, which is no longer used. (Takes into account of living costs like mortgages/rent),

82
Q

Savings

A

The decision by consumers to postpone consumption

83
Q

Seasonal unemployment

A

Unemployment caused when an industry only operates during certain times of the year

84
Q

Short run

A

In the short term. I.e. within a few months.

85
Q

Short run aggregate supply (SRAS)

A

Aggregate supply in the short term

86
Q

Structural unemployment

A

Unemployment caused by the long-term decline of an industry

87
Q

Supply-side policies

A

Government policies aimed at increasing the productive potential of the economy and shifting LRAS to the right

88
Q

Total GDP

A

The GDP of the whole country

89
Q

Trade (business) cycle

A

The tendency of economic growth to rise and fall above and below the trend rate of economic growth, causing booms and busts

90
Q

Underemployment

A

Those who are working below their skill level or for fewer hours than they would like.

E.g. A graduate working at a bar or someone on a zero-hours contract.

91
Q

Unemployed

A

Those who are without work, able to start work in the next 2 weeks and have actively sought work for the last 4 weeks

92
Q

DELETE - IGNORE

A

DELETE - IGNORE

93
Q

DELETE - IGNORE

A

DELETE - IGNORE

94
Q

Wealth

A

A stock of assets

Economics Edexcel A A level (24 decks)

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