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economics > macroeconomics chapters 31-40 > Flashcards

macroeconomics chapters 31-40 Flashcards

1
Q

macro economics

A

part of economics that is concerned with data, descisons, perfomance, polices and objectives that relete to the whole economy

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2
Q

inflation

A

is the rate of increase of the general price level and the corrsposning fall in the value of money

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3
Q

inflation target

A

2%

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4
Q

unemployment target

A

5%

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5
Q

economic growth

A

occurs when overtime an economy expands its capacity to produce goods and services

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6
Q

gross domestic product or GDP

A

value of all goods and services produced within an economy over a given period of time

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7
Q

a recession

A

a decline in the level of economics activity as measured by a fall in GDP that occurs over a period of six months or longer

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8
Q

real GDP

A

GDP data that is adjusted to remove the effect of inflation

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9
Q

unemployment

A

exists when people are seeking work but are unable to find it

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10
Q

the balance of payments

A

records transactions between UK residence and the rest of the world

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11
Q

the current account balance of payments

A

records transactions in good and services between UK residence and the rest of the world

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12
Q

what are the four main macroeconomics objectives

A
  1. price stability e.g low inflation rate
  2. sustainable rates of economics growth
  3. low unemployment
  4. a balanced balance of payments
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13
Q

other three macro economic objectives

A

balancing the budget
increasing productivity rates
achiving equal distribution of income

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14
Q

the distribution of income

A

measures how a nations total income is spread between that countries inhabitants

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15
Q

possible conflicts between government and macro economics objectives

A
  1. possible implications of focusing on price stability
  2. possible implications of focusing on promoting economic growth
    3.implications of achieving low levels of unemployment
  3. implications of focusing on achieving balanced current account
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16
Q

impact of short term change

A

more chance of conflict

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17
Q

cyclical unemployment

A
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18
Q

macro economics indicators

A
  1. GDP
  2. Consumer prices and retail prices
  3. unemployment
  4. productivity/labour productivity
  5. the balance of payments on current account
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19
Q

economics inactivity

A

refures to people who are not in employment and who are not actively looking for work

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20
Q

Real GDP per capita

A

measures the average income per person in a country after following the effects of inflation

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21
Q

nominal GDP

A

measures the values of all goods and services that are produced within an economy over a given period of time using their price at the time of production, thus it does not exclude the effects of inflation on the value of output

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22
Q

an index number

A

is a means of measuring changes in data over time by relating changes to a base year that is given the value of 100

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23
Q

frictional unemployment

A

people who are moving between jobs

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24
Q

structural unemployment

A

imobilties in the labour market, e.g people having the wrong skills

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25
Q

seasonal unemployment

A

less work in ‘of season’

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26
Q

cyclical unemployment

A

labour forces are reduced as a result of business cycles or fluctuations in the economy

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27
Q

weighted index numbers

A

shows the average change in a large number of variables and this advrage reflects the importance or weight of its various components

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28
Q

national income

A

monetary value of the total output of an economy over a specific time period

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29
Q

value added

A

amount by which the worth of a good or service increases at each stage of production

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30
Q

nominal national income

A

economies total income expressed in money terms, valued in current price

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31
Q

real national income

A

income is a measures of national income that removes the effect of rising prices in order to show changes in the volume of production between time periods.

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32
Q

circular flow of income

A

is a model that shows how money flows within a simplified economy with households and firms as key comondents

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33
Q

withdrawals or leakage

A

factors that lead to income not being passed on within the circular flow - these compromise savings taxations and imports

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34
Q

injections

A

are additions to the circular flow of income from outside these comprise of investment, government spending and exports

35
Q

aggregate demand

A

is the total planned demand for an economies goods and services at a given price level over a specific time period

36
Q

investment

A

planned spending by firms that adds to an economies capital stock e.g property, machinery, verticals and other items used in production

37
Q

government spending

A

experndituiture by central and local governments on goods and services

38
Q

net exports

A

spending by forgeners on exported goods and services minus expenditure by households firms and government imported products.

39
Q

consumptions

A

planned spending by households on goods and services

40
Q

certius paribus

A

everything remaning constant

41
Q

saving

A

is income that is received but which is not spent and is not a component of aggregate demand

42
Q

disposable income

A

the amount of income received by households after taking into account taxes on income and benefits received

43
Q

autonomous consumption

A

the level of consumption expenditure by households that is inderpendent of the level of income received

44
Q

marginal propensity to consume

A

proportion of any additional income that is spent on consumption

45
Q

marginal propensity to save

A

proportion of any increase in income that is saved.

46
Q

advrage propensity to consume

A

is the proportion of income that is consumed. this is measured by diving consumption by income

47
Q

mortgage

A

long term lone that is used to purchase a property (usually up-to 25 years)

48
Q

capiatal stock

A

value of all physical assets used in production in the economy that are still in use such as machinery, property and verticals.

49
Q

capital consumption or depriciation

A

is the decline in value of an economies physical assets used in production due to wear and tear.

50
Q

the marginal efficiency of capital (MEC)

A

net rate of return that is expected from an investment

51
Q

the accelerator theory of investment

A

states that the level of planned investment depends on the rate of change in national income

52
Q

the capital output ratio

A

expresses the relationship between the cost of capital and the value of output produced annually by the capital

53
Q

the exchange rate

A

price of one currency expressed in terms of another

54
Q

aggregate demand curve

A

shows the relationships between the tital level of demand in an economy and the general price level

55
Q

aggragte supply

A

is the total quantity of output that producers in an economy are willing to supply at a specific price level over a specific period of time

56
Q

factors of production

A

are the scarce resources, - land labour capital, enterprise (used in production)

57
Q

net migration

A

difference between immigration and emigration

58
Q

parciptation rate

A

persentage of people that are working age within the economy who are either employed or are looking for work

59
Q

factor mobility

A

measure the ease with which local factors of production move from one use to another

60
Q

macroeconomic equilibrium

A

is a level of economic activity that occurs when aggregate demand are aggregate supply are equal

61
Q

demand side shocks

A

unexpected factors that effect aggregate demand negatively or positively such as a significant reduction in income tax rates

62
Q

supply side shocks

A

expected factors that effect aggregate supply negatively or positively such as major fall in the price of oil

63
Q

demand side shock postitive cause

A

construction boom such as that occurring in china
-a large unexpected cut in income tax rates
-a fall in the rate of intrest, bosting consumption. and investment
- a major trading nation seaking to expand its economy such as japan in 2015
- sustained rise in company share prices improving consumers perception of their wealth

64
Q

likely effect of positive demand side shocks

A

general price level is likely to rise, the impact will be greater if the economy is operating near full capacity
- the level of output or national income will increase, though the effect will be relivtivly small as fill employment output is reached.

65
Q

negative demand side shock causes

A

difficulties in consumers and firms acquiring loans from banks
-significant decline in business confidence reducing investment
- substantial reductions in government spending such as the UK IN 2015.
- a major economy going into recession reducing purchases of imports
a sudden rise in the countries exchange rate increasing export prices and reducing those of imports

66
Q

negative demand side shock effects

A

-the general price level is likely to fall, with falls being more significant if the economy is operating near maximum capacity
- the level of output or national income will decline, through possibly by comparatively small amounts, of the economy is operating near full employment

67
Q

supply side shock postive cases

A
  • a sudden increase in net migration as occurring in the UK after 2004
    -significant advances in technology with positive implications of production techniques
  • a rise in productivity for any factors of production
68
Q

supply side shocks positive effects

A

-the general price level is likely to fall
- the level of output or national income will increases, the extent of which will depend on range of factors and particular the cause of shock.

69
Q

causes of negative supply side shocks

A

-substaniatal rise in the general wage level in an economy
-increase in business taxes
-a fall in the price of key products sold such as oil
- the occurrence of a natural disaster

70
Q

effects of negative supply side shocks

A
  • a rise in the general price level
    -a decline in the level of output, which could be long term on the case of some causes such as natural disaters
71
Q

short run econmic growth

A

increase in production of goods and services that occurs without an economy acquiring additional factors of production this is because the available resources within the economy are used more intensivly

72
Q

long run economic growth

A

refuses to an increase in an economies productive potential and this is usually what is ment by the term ‘economic growth’

73
Q

the long run trend rate of economic growth

A

rate of economic growth that is sustained over a long period of time

74
Q

the economic cycle

A

occurs when an economy actual level of GDP shows a regular pattern of variation compared with its long term trend

75
Q

what are the four phases of the economic cycle?

A

recovery
peak
downswing
trough

76
Q

output gap

A

measures the difference between an economies accrual level of real GDP and its long term trend level of real GDP

77
Q

A positive output gap

A

exists when accual level of real GDP is above the long term trend level

78
Q

negative output gap

A

exits when accrual level of the real GDP is below the long term trend level

79
Q

characteristics of positive output gap

A

-temporary
-high level of aggregate demand exists
-associated with high levels of production and levels of employment
-accompanied with an increase in inflationary pressure

80
Q

employment

A

employment is a measure of the number of people who are in work at a particular time

81
Q

economically active

A

refuses to a person who is either in employment or who is unemployed and therefor seeking work

82
Q

employment rate

A

persenatge of the population age 16-64 who are in work

83
Q

deindustrialization

A

process which describes the removing of the manufacturing industry from an economy and the economic and social conquenses such as unemployment which follow.

economics (6 decks)

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