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Economics > The macroeconomy (A level) > Flashcards

The macroeconomy (A level) Flashcards

1
Q

Multiplier

A

a numerical estimate of a change in spending in relation to the final change in spending

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2
Q

Marginal propensity to save (mps)

A

the proportion of extra income which is saved

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3
Q

Marginal propensity to consume (mpc)

A

the proportion of extra income that is spent

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4
Q

Aggregate expenditure

A

the total amount spent in the economy at different levels of income

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5
Q

Marginal propensity to import (mpm)

A

the proportion of extra income spent on imports

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6
Q

Consumption

A

spending by households on goods and services

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7
Q

Average propensity to consume (apc)

A

the proportion of income that is consumed

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8
Q

Average propensity to import (apm)

A

the proportion of income that is spent on imports

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9
Q

Consumption function

A

the relationship between income and consumption

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10
Q

Savings function

A

the relationship between income and saving

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11
Q

Autonomous investment

A

investment that is made independent of income

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12
Q

Induced investment

A

investment that is made in response to changes in income

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13
Q

Accelerator theory

A

a model that suggests investment depends on the rate of change in income

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14
Q

Capital-output ratio

A

a measure of the amount of capital used to produce a given amount, or value, of output

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15
Q

Inflationary gap

A

the excess of aggregate expenditure over potential output (equivalent to a positive output gap)

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16
Q

Deflationary gap

A

a shortage of aggregate expenditure so that potential output is not reached (equivalent to a negative output gap)

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17
Q

Actual economic growth

A

an increase in real GDP

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18
Q

potential economic growth

A

an increase in the productive capacity of the economy

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19
Q

Output gap

A

a gap between actual and potential output

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20
Q

Negative output gap

A

a situation where actual output is below potential output

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21
Q

Positive output gap

A

a situation where actual output is above potential output

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22
Q

Business cycle

A

fluctuations in economic activity; also known as trade cycle

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23
Q

Depression

A

a fall in real GDP that lasts several years

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24
Q

Gig economy

A

a labour market based on short-term contracts

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25
Q

Sustainable economic growth

A

economic growth that does not threaten future generations’ ability to experience economic growth

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26
Q

Climate change

A

a change in the weather of a region over a period of time

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27
Q

Greenhouse gases

A

carbon dioxide, methane, nitrous oxide

28
Q

Global warming

A

a rise in the temperature of the world’s atmosphere arising from the emission of greenhouse gases

29
Q

Polluter pays principle

A

a policy that makes those responsible for causing damage to the environment pay for that damage

30
Q

Full employment

A

the level of employment corresponding to where all who wish to work have found jobs, excluding frictional unemployment

31
Q

Equilibrium unemployment

A

the unemployment which exists when the labour market is in equilibrium. It includes voluntary, frictional and structural unemployment

32
Q

Voluntary unemployment

A

unemployment that arises when workers are not willing to work at the current wage rate.

33
Q

Disequilibrium unemployment

A

unemployment that arises when the aggregate supply of labour is greater than the aggregate demand for labour at the current wage rate

34
Q

Natural rate of unemployment

A

the rate of unemployment that exists when the aggregate demand for labour equals the aggregate supply of labour at current wage rate and price level

35
Q

Hysteresis

A

unemployment causing unemployment due to workers becoming deskilled and demotivated when they are out of work for a long time.

36
Q

Long-term unemployed

A

those who have been unemployed for a year or longer

37
Q

Labour mobility

A

ability of workers to change where they work and in which occupation

38
Q

Self-employed

A

those working for themselves

39
Q

Occupational mobility of labour

A

the ability of workers to move from one occupation to another occupation

40
Q

Geographical mobility of labour

A

the ability of workers to move to a job in a different location

41
Q

Money

A

an item which is generally acceptable as a means of payment

42
Q

Double coincidence of wants

A

a situation where two people each have something the other one wants

43
Q

Money supply

A

the total amount of money in an economy

44
Q

Narrow money

A

money that can be spent directly

45
Q

Broad money

A

money used for spending and saving

46
Q

Quantity theory of money

A

the theory that links inflation in an economy changes in the money supply

47
Q

Fisher equation

A

the statement that MV = PT

48
Q

Demand deposit account

A

a bank account that allows the holder to make and receive payments

49
Q

Savings deposit account

A

a bank account which pays interest and may require notice to be given before money can be withdrawn from it

50
Q

Government securities

A

bills and bonds issued by the government to raise money

51
Q

Equities

A

shares in firms

52
Q

Overdraft

A

permission to spend more than is in a demand deposit account

53
Q

Loan

A

a sum of money lent at an agreed rate of interest for a specific time period

54
Q

Reserve ratio

A

the proportion of liquid assets to total liabilities

55
Q

Capital ratio

A

a bank’s available financial capital as a percentage of its riskier assets

56
Q

Liquid

A

the ability to turn an asset into cash quickly and without loss

57
Q

Bank credit multiplier

A

the process by which banks can make more loans than deposits available

58
Q

Quantitative easing

A

a situation where a central bank buys government and private securities from the private sector in order to increase the money supply and so stimulate economic activity

59
Q

Total currency flow

A

the net amount of money that flows into or out of the country as a result of international transactions

60
Q

Economic and monetary union

A

co-ordination of policies and the operation of a single currency by a group of countries

61
Q

Liquidity preference

A

a Keynesian concept that explains why people demand money

62
Q

Transactions motive

A

the desire to hold money for the day-to-day buying of goods and services

63
Q

Precautionary motive

A

a reason for holding money for unexpected or unforeseen events

64
Q

Active balances

A

the amount of money held by households or firms for possible near-future use

65
Q

Speculative motive

A

a reason for holding money with a view to make future gains from buying financial assets

66
Q

Idle balances

A

the amount of money held temporarily as the returns from holding financial assets are too low

67
Q

Liquidity trap

A

a situation where interest rates cannot be reduced any more in order to stimulate an upturn in economy activity

Economics (11 decks)

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