Macroeconomics (theme 2) Flashcards
Actual growth
Economic growth measures by changes in real GDP
Aggregate demand (AD)
The total level of demand in an economy at any given price at a moment in time
Aggregate supply (AS)
The total amount of output in the economy at any given price at a moment in time
Animals spirits
The level of confidence of business owners
Balance of payments
A record of all financial dealings ovens a period of time between economics agents of one country and another.
Base year
A year chosen as a good comparison in series of data when given an index
Boom
The peak of the business cycle, when growth is high
Budget
Where the govern,ent lays out their spending and taxation plans
Budget deficit
When the government spends more money that it receives
Budget surplus
When the government receive more money that it spends
Circular flow
A model of the economy which shows the flow of goods and services, the factors of production and money around the economy.
Claimant count
The number of people received benefits from being unemployed
Consumer price index (CPI)
Offices measure used to calculate the rate of inflation, using a weighted basked of goods.
Consumption
Consumer spending on goods and services
Cost push inflation
Inflation caused by a decrease in AS
Current account
A record of the payments for the purchase and sale of goods and services, as well as income and transfers.
Current account defecit
When more money leaves the country than enters, so the current account is negative.
Current account surplus
When more money enters the country than leaves, so the current account is positive
Cyclical unemployment
Unemployment caused by a lack of AD
Deflation
A persistent fall in price of goods and services
Deflationary policy
Fiscal or monetary policy which is aimed at reducing AD
Demand pull inflation
Inflation caused by an increase in AD
Deprecation
The reduction in value of machinery overtime
Direct tax
Taxes paid straight to the government by individual taxpayer.
Disinflation
A reduction in the rate of inflation
Disposable income
They money consumers have left to spend after tax.
Economics growth
An increase in the long term productive potential in the economy.
Measure by an increase in real GDP
Employed
So some who does more than 1 hour of paid woke a weeks.
Expansionary policy
Fiscal or monetary policy which is aimed at increasing AD
Exports
Goods or services sold to foreigners that bring income to the county.
Export-Les growth
Economic growth arising from an increase in exports
Fiscal policy
The use of borrowing, government spending and taxation to manipulate the level of AS and improve macroeconomic performance.
Frictional unemployment
Unemployment caused when people move between jobs and enter the job market.
GDP
The value of goods and services produced in a county over a given period of time.
GDP per capita
Total GDP divided by the population
Gross investment
Investment both to replace old machinery that has depreciated and to buy new ones.
Gross national income (GNI)
The value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends.
Gross national products (GNP)
The value of goods and species produced by citizens of a country.
Government spending
Spending by the government for the provision of goods and services
Imports
Goods and services bought from foreigners that takes income out of the country.
Inactive
Those neither employed nor unemployed.
Income
A flow of assets
Index number
Numbers allowing accurate comparisons over time to be made
Indirect tax
Tax where the person charged with paying the money to the government is able to pass on the cost to someone else
Inflation
The general rise if prices of goods and services that eroded the purchasing power of money.
Injection
Spending power entering the circular flow of income. (Investment, government spending or exports).
Investment
Spending by businesses in capital goods, which leads to the creation of real goods.
Labour force survey
A measure of unemployment which surveys people to class them as unemployed, employed or inactive.
Living standards
The quality of life enjoyed by people in a country
Long run
When all factors of production are variable
LRAS
The total output of an economy can produce when operating at full output.
Long run trend growth rate
The average sustainable rate of economics growth over a period of time.
Marginal propensity to import
The proportion of an increase in income spends on imports.
Marginal propensity to save
The proportion of an increase in income that is saved
Marginal propensity to tax
The proportion of an increase in income that is taken away in tax
Marginal propensity to withdraw
The proportion of an increase in income that is withdrawn from the circular flow
Market-based supply-side policies
Policies which are designed to remove anything which prevents the free marketer system working efficiently.
Monetary policy
The attempts of the central bank to control the level of AD by altering base interests stem or the amount of money in the economy.
Multiplier
An increase in an injection will lead to an even greater increase of national income.
1/(1-MPC).
National expenditure
The value of spending by households on goods and services.
National income
The value of income paid by firms to households in return for factors of production.
National output
The value of the flow of goods and services from firms to households.
Negative output gap
When GDP is lower than predicted. (Economy is producing below full output).
Net exports
Exports minus imports
Net investment
Investment adjusted for depreciation, gross investment minus depreciation.
Nominal GDP
GDP which does not take inflation into account.
Output gap
The difference between the king term trend growth and actual growth.
Positive output gap
When GDP is higher than predicted. (The economy is producing above full output).
Potential growth
A change in the productive potential of the economy.
Purchasing power parity
Exchange rate of one currency to another that compares the cost of living in different countries through comparing a typical basket of goods
Quantitative easing
When the central banks buy assessed in exchange for money in an attempt to increase the money supply.
Real GDP
GDP which strips out the effect of inflation.
Real wage unemployment
Unemployment caused when wages are set above the equilibrium wage rate.
Recession
The trough of the business cycle, when growth is low.
Retail price index (RPI).
An old measure of inflation which had lost its national statistic status
Savings
The decision by consumers to postpone consumption.
Seasonal unemployment
Unemployment caused when an industry only operates during certain times of the year
Short run
When at least one factor of production is fixed
SRAS
Aggregate supply when at least one factor of production is fixed.
Short run Phillips curve
Shows the relationship between unemployment and inflation.
Structural unemployment
Unemployment caused by the long-term decline of an industry
Supply-side policies
Government policies aimed at increasing the production potential of the economy and shifting LRAS to the right.
Total GDP
The GDP as a whole country
Trade cycle
The tendency of economic growth to rise and fall above and below the trend rate of economic growth.
Underemployment
Those who would like not work full time but are not.
Unemployed
Those who are without work but have been actively seeking for it
Value of GDP
GDP at current prices
Volume of GDP
The size of the basket of goods.
Wealth
A stock of assets
Withdrawal
Spending power leaving the circular flow of income. (Savings, taxation and imports.)
