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
2
Q
inflation
A
is the rate of increase of the general price level and the corrsposning fall in the value of money
3
Q
inflation target
A
2%
4
Q
unemployment target
A
5%
5
Q
economic growth
A
occurs when overtime an economy expands its capacity to produce goods and services
6
Q
gross domestic product or GDP
A
value of all goods and services produced within an economy over a given period of time
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
8
Q
real GDP
A
GDP data that is adjusted to remove the effect of inflation
9
Q
unemployment
A
exists when people are seeking work but are unable to find it
10
Q
the balance of payments
A
records transactions between UK residence and the rest of the world
11
Q
the current account balance of payments
A
records transactions in good and services between UK residence and the rest of the world
12
Q
what are the four main macroeconomics objectives
A
- price stability e.g low inflation rate
- sustainable rates of economics growth
- low unemployment
- a balanced balance of payments
13
Q
other three macro economic objectives
A
balancing the budget
increasing productivity rates
achiving equal distribution of income
14
Q
the distribution of income
A
measures how a nations total income is spread between that countries inhabitants
15
Q
possible conflicts between government and macro economics objectives
A
- possible implications of focusing on price stability
- possible implications of focusing on promoting economic growth
3.implications of achieving low levels of unemployment - implications of focusing on achieving balanced current account
16
Q
impact of short term change
A
more chance of conflict
17
Q
cyclical unemployment
A
18
Q
macro economics indicators
A
- GDP
- Consumer prices and retail prices
- unemployment
- productivity/labour productivity
- the balance of payments on current account
19
Q
economics inactivity
A
refures to people who are not in employment and who are not actively looking for work
20
Q
Real GDP per capita
A
measures the average income per person in a country after following the effects of inflation
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
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
23
Q
frictional unemployment
A
people who are moving between jobs
24
Q
structural unemployment
A
imobilties in the labour market, e.g people having the wrong skills
25
seasonal unemployment
less work in 'of season'
26
cyclical unemployment
labour forces are reduced as a result of business cycles or fluctuations in the economy
27
weighted index numbers
shows the average change in a large number of variables and this advrage reflects the importance or weight of its various components
28
national income
monetary value of the total output of an economy over a specific time period
29
value added
amount by which the worth of a good or service increases at each stage of production
30
nominal national income
economies total income expressed in money terms, valued in current price
31
real national income
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.
32
circular flow of income
is a model that shows how money flows within a simplified economy with households and firms as key comondents
33
withdrawals or leakage
factors that lead to income not being passed on within the circular flow - these compromise savings taxations and imports
34
injections
are additions to the circular flow of income from outside these comprise of investment, government spending and exports
35
aggregate demand
is the total planned demand for an economies goods and services at a given price level over a specific time period
36
investment
planned spending by firms that adds to an economies capital stock e.g property, machinery, verticals and other items used in production
37
government spending
experndituiture by central and local governments on goods and services
38
net exports
spending by forgeners on exported goods and services minus expenditure by households firms and government imported products.
39
consumptions
planned spending by households on goods and services
40
certius paribus
everything remaning constant
41
saving
is income that is received but which is not spent and is not a component of aggregate demand
42
disposable income
the amount of income received by households after taking into account taxes on income and benefits received
43
autonomous consumption
the level of consumption expenditure by households that is inderpendent of the level of income received
44
marginal propensity to consume
proportion of any additional income that is spent on consumption
45
marginal propensity to save
proportion of any increase in income that is saved.
46
advrage propensity to consume
is the proportion of income that is consumed. this is measured by diving consumption by income
47
mortgage
long term lone that is used to purchase a property (usually up-to 25 years)
48
capiatal stock
value of all physical assets used in production in the economy that are still in use such as machinery, property and verticals.
49
capital consumption or depriciation
is the decline in value of an economies physical assets used in production due to wear and tear.
50
the marginal efficiency of capital (MEC)
net rate of return that is expected from an investment
51
the accelerator theory of investment
states that the level of planned investment depends on the rate of change in national income
52
the capital output ratio
expresses the relationship between the cost of capital and the value of output produced annually by the capital
53
the exchange rate
price of one currency expressed in terms of another
54
aggregate demand curve
shows the relationships between the tital level of demand in an economy and the general price level
55
aggragte supply
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
factors of production
are the scarce resources, - land labour capital, enterprise (used in production)
57
net migration
difference between immigration and emigration
58
parciptation rate
persentage of people that are working age within the economy who are either employed or are looking for work
59
factor mobility
measure the ease with which local factors of production move from one use to another
60
macroeconomic equilibrium
is a level of economic activity that occurs when aggregate demand are aggregate supply are equal
61
demand side shocks
unexpected factors that effect aggregate demand negatively or positively such as a significant reduction in income tax rates
62
supply side shocks
expected factors that effect aggregate supply negatively or positively such as major fall in the price of oil
63
demand side shock postitive cause
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
likely effect of positive demand side shocks
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
negative demand side shock causes
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
negative demand side shock effects
-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
supply side shock postive cases
- 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
supply side shocks positive effects
-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
causes of negative supply side shocks
-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
effects of negative supply side shocks
- 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
short run econmic growth
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
long run economic growth
refuses to an increase in an economies productive potential and this is usually what is ment by the term 'economic growth'
73
the long run trend rate of economic growth
rate of economic growth that is sustained over a long period of time
74
the economic cycle
occurs when an economy actual level of GDP shows a regular pattern of variation compared with its long term trend
75
what are the four phases of the economic cycle?
recovery
peak
downswing
trough
76
output gap
measures the difference between an economies accrual level of real GDP and its long term trend level of real GDP
77
A positive output gap
exists when accual level of real GDP is above the long term trend level
78
negative output gap
exits when accrual level of the real GDP is below the long term trend level
79
characteristics of positive output gap
-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
employment
employment is a measure of the number of people who are in work at a particular time
81
economically active
refuses to a person who is either in employment or who is unemployed and therefor seeking work
82
employment rate
persenatge of the population age 16-64 who are in work
83
deindustrialization
process which describes the removing of the manufacturing industry from an economy and the economic and social conquenses such as unemployment which follow.
