The Macroeconomic Economy Deffinitions Flashcards
Accelerator
A change in the level of investment into capital goods, brought about by a growth of aggregate demand
AD
Aggregate Demand: Total planned spending on real output produced by the economy
AS
Aggregate Supply - Total real national output
Autonomous consumption
The minimum level of consumption in society needed to sustain a basic standard of living
Boom/Bust Policy
When the government enacts policies to stimulate then contract the economy
Circular flow of income
The circulation of national income, output and expenditure between economic agents, such as firms and households
Credit crunch
Low availability of credit; when borrowing becomes (significantly )more expensive
Full employment income
Total output of an economy when unemployment is minimised
FLS
Funding for Lending Scheme (FLS): Scheme allowing banks to borrow cheaply from the Bank of England, on the condition that they lend the money out to promote economic growth
GDP
Gross domestic product (GDP): The sum of all goods and services produced in an economy over a period of time
Injection
Spending power entering the circular flow of income resulting from investment, government spending and exports
Keynesian economist
Followers of the economist John Maynard Keynes, who believe the government should generally manage the economy
LRAS
Long run aggregate supply (LRAS): Aggregate supply when the economy produces its productive potential
Monetarist
Economists who believe increases in the money supply is a significant factor of inflation
Multiplier
The relationship between a change in aggregate demand and the resulting change in national income
Multiplier ratio
Number of times a rise in national income is larger than the rise in the initial injection of AD, which led to the rise in national income
National capital stock
Stock of capital in an economy
National income
The flow of new output produced by the economy
What is national output the same as
The same as national income
What is national product the same as
The same as national income
Nominal GDP
GDP measured at current market prices, without taking into account the effects of inflation
Pro-free market economists
Opponents of Keynesian economists, who believe the government should generally leave the markets to operate freely
Real GDP
GDP measured, taking into account the effects of inflation
Real wage
The purchasing power of the nominal wage, after taking into account the effects
of inflation
Real wage unemployment
Unemployment caused by real wages being stuck above the equilibrium wage rate
Red tape
Rules that restrict what a firm can do
Riugfryufgeirwfeueiw
Savings
Unspent income
SRAS
Short run aggregate supply (SRAS): Aggregate supply when the level of capacity is fixed, though existing factors can be utilised more or less to impact real output
Short run economic growth
An increase in the real output by taking up slack in the economy
Sovereignty wealth fund
Government or state run fund created by profits from natural resources
Technological progress
When technological change results in more output for the same quantity of input
Trend growth rate
The level of economic growth that is sustainable, without putting upward pressure on inflation
Withdrawal
Spending power exiting the circular flow of income resulting from savings, taxation and imports
