paper 2 Flashcards
what is Gross domestic product (GDP)
the total value of goods and services produced in the country in a year
what is GDP per capita
GDP divided by the total population, therefore GDP per head.
what is Economic Growth
growth in output of the economy over time - a growth of real GDP over time
what is Full employment
when all those able and willing to work are in paid employment at the current wage rate
what is Unemployment
when workers who are able and willing to work are unable to find employment (at current wage rates)
what is the Claimant Count
measures unemployment according to the number of people claiming unemployment-related benefits ( such as Jobseeker’s Allowance)
what is the Labour force survey
a survey of a sample of households, counting people as unemployed if they are actively seeking work but do not have a job (in the week of the survey).
what is Inflation
A sustained rise in the general price level over time
what is Price stability
the general level of prices is kept constant or grows at an acceptably low rate over time.
what is Regressive tax
a tax that takes a greater proportion of income from lower incomes, or takes a smaller percentage of a higher income
Progressive Tax definition
Tax that takes a greater proportion of income from higher incomes, or takes a smaller percentage of lower income
what is a Balanced Budget
government spending is equal to tax revenue
what is Budget Deficit
government spending is greater than tax revenue
what is Budget Surplus
tax revenue is greater than government spending
monetary policy
a policy that aims to control the total supply of money in the economy to try to achieve the government’s objectives, particularly price stability.
fiscal policy
it’s the use of taxation and government spending to influence the level of economic activity
what does fiscal policy achieve?
economic growth
low unemployment
price stability
a balance in the balance of payments
expansionary fiscal policy
a policy used to increase aggregate demand by either increasing government spending, or decreasing taxation on the country
contractionary fiscal policy
a policy that aims to gain a budget surplus and reduce inflation by decreasing government spending and increasing taxation on the country
liquidity definition
ability to turn assets into cash for cash flows, to pay for current liabilities such as bills, wages etc
reasons for current account deficit
low revenue from exports (due to low demand for exports)
high spending on imports
current account deficit definition
where outflows are greater than inflows (export in goods and services is less than the sum of imports in goods and services)
tariff definition
tax on imports
quotas
physical limit to a good
