Paper 2 Key Terms Flashcards
What is GDP ?
Value of output produced within a country in a year
What is employment?
When people who are willing and able to work can find a job
What is unemployment?
When people who are willing and able to work cannot find a job
What is the claimant count?
A measurement of unemployment using the number of people who claim benefits
What is the level of unemployment?
The total number of people who are in the workforce and are without a job
What is cyclical unemployment?
Unemployment due to a fall in total demand for goods and services
What is frictional unemployment?
Unemployment due to the moving between different jobs
What is seasonal unemployment?
Unemployment due to a decrease in demand at certain times of the year
What is structural unemployment?
Unemployment due to the decline of an industry
What is the distribution of income ?
Describes how income is divided between individuals and households in a country
What is income ?
A flow of money as a payment for working, it is earned
What is wealth ?
It is the total value of all your assets
What is price stability?
When the general price level either stays the same or rises at a low rate
What is inflation ?
A sustained increase in the general price level
What is real values ?
The value of an economic variable that takes account of changes in the general price level over time
What is nominal value ?
Value of an economic variable based on current prices
What is the CPI ?
A measure of the general price level used to calculate the inflation rate
What is government revenue?
The amount of money the government receives
What is government spending ?
The total amount of money spent by the government in a given time period
What is direct tax ?
A tac on income and wealth
What is an indirect tax ?
A tax on purchasing certain goods or services
What is a balanced budget ?
When revenue = spending
What is a budget surplus ?
When revenue is greater than government spending
What is a budget deficit?
When revenue is less than government spending
What is fiscal policy ?
A policy that aims to control the economy with the use of taxation and government spending
What is progressive tax ?
Taxes that take a greater percentage of tax the higher the income
What is monetary policy ?
A policy that aims to control the total supply of money, to achieve economic objectives such as price stability
What is supply side policy ?
Any policy that helps to increase a country’s productive potential
What is an externality ?
Impact of an economic transaction on a third party
What is a positive externality ?
The benefit of an economic transaction from a third party
What is a negative externality ?
The cost of an economic transaction for a third party
What is taxation ?
Government collection of money from individuals and firms
What is an indirect tax ?
Tax raised on spending on goods and services
What is a subsidy
Sum of money given by government to firms to encourage production and consumption
What is state provision ?
Government intervention in a market to supply a good or service direct to consumers
What is legislation?
A law created by the government to control the way individuals or firms behave
What is regulation ?
A rule from the government that firms and consumers have to follow
What is information provision ?
Government intervention in a market to give knowledge that might change behaviour
What is international trade ?
The exchange of goods and services between countries
What are imports ?
Goods and services bought from abroad. There is an outflow of money from the domestic country
What are exports ?
Goods and services sold abroad. There is an inflow of money into the country
What is a free trade agreement?
Arrangement to move goods and services between countries without restrictions
What is the balance of payments?
Record of all the financial transactions between 1 country and the rest of the world
What is the current account ?
The record of trade in goods and services, income flows and transfers between 1 country and the rest of the world
What is a balanced current account ?
The sum of exports plus the inflow of income and transfers is equal to the sum of imports plus the outflow of income and transfers
What is a current account surplus ?
Where the sum of exports plus the inflow of income and transfers is greater than the sum of imports plus the outflow of income and transfers
What is a current account deficit ?
Where the sum of exports plus the inflow of income and transfers is less than the sum of imports plus the outflow of income and transfers
What is an exchange rate ?
The price of one currency in terms of another currency
What is globalisation ?
The integration of countries through trade
What is development?
The process of increasing peoples standard of living and wellbeing over time
