Macroeconomics Flashcards
Structural unemployment
unemployment caused by things like changes in demand, increased foreign competition and changes in the methods of production.
Consumer price index
measure of the weighted average of prices of a representative basket of goods & services (the typical basket): average prices of goods and services
Deflation
sustained fall in the prices of goods and services (or negative inflation or a fall in the CPI)
Demand pull inflation
I am inflation caused by excess demand or where AD is growing more quickly than AS
Economic growth
an increase in the output of an economy, e.g. a rise in its productive potential over the long run.
Full employment
the lowest level of unemployment possible.
Balance of payments
record of a country’s transactions with the rest of the world.
Unemployment rate
the percentage of the labour force who are willing and able to work but are without jobs.
Direct taxes
taxes on incomes and wealth, e.g. income tax, corporate taxes and inheritance tax (on wealth).
Labour market reforms
reforms (changes made by the government) to make the labour market work more freely/efficiently.
Monetary policy
decisions made by the central bank about the money supply and interest rates in order to influence AD.
Money supply
the quantity of notes and coins in circulation in an economy.
Indirect tax
I am a tax on goods and services.
Regressive taxes
a tax which takes a larger percentage of the income and wealth of the poor.
Budget
the relationship between government revenue and government spending.
Deregulations
the removal of rules and regulations by the government to help markets work more freely.
GDP per capita
the total output of an economy divided by the population.
Recession
fall in real GDP over a 6 month period (2 quarters).
Unemployment
being without a job while willing and able to work.
Frictional unemployment
unemployed because I am between jobs.
Progressive tax
I take a larger percentage of the income and wealth of the rich.
Inflation
I am the rise in the price level of goods and services over time. I am sustained, not one-off.
Fiscal policy
I am decisions about government spending and taxation in order to influence AD.
Foreign exchange rate
I am the price of one currency in terms of another currency/currencies.
Supply-side policy
measures designed to increase AS.
Budget surplus
government revenue being higher than government spending.
Income redistribution
I am involved in transferring resources from the rich to the poor.
Budget imbalance
where the amount government receives in revenue does not equal the amount government spends.
Privatization
the transfer of resources/assets from the government or public sector to the private sector, e.g. the sale of state owned firms.
Formal economy
I am the part of an economy where workers have the same access to benefits rights and protection.
Budget deficit
government spending in excess of government revenue.
Proportional tax/ flat rate
a tax which takes the same percentage of income or wealth of all taxpayers.
Government Revenue
the amount of money the government receives from sources such as taxation.
Real GDP
nominal GDP (GDP at today’s prices) adjusted for inflation.
Informal economy
the part of an economy where workers do not have the same access to benefits/rights and protection.
Cost Pull Inflation
inflation caused by a rise in costs.
Actual Economic growth
An increase in the output of an economy
Potential economic growth
An increase in an economy’s productive capacity
Aggregate demand
The total demand of a country’s product at a given price level. It consists of consumer expenditure, investment, government spending and net exports (X-M)
Aggregate supply
The total amount of goods and services that domestic firms are willing to supply at a given price level
Economically active
Being a member of the labour force
Budget
the relationship between government revenue and government spending
Budget deficit
Government spending is higher than government revenue
