Theme 2 Flashcards by Austin J

Capital Labour Substitution

Replacing workers with machines to increase productivity and reduce the unit cost of production.

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Cyclical Unemployment

Unemployment caused by a persistent lack of aggregate demand for goods and services.

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Discouraged Workers

People out of work for a long time who may give up on job search and effectively leave the labour market

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Frictional Unemployment

Caused by workers seeking a better job or who are in-between jobs, or new entrants to the labour market.

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Full-employment

When there are enough job vacancies for all the unemployed to take work.

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Geographical Immobility

Difficulty in moving regions / areas to get a job

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Hysteresis

When a sustained period of low aggregate demand can lead to a permanent reduction in the active labour supply.

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Involuntary Unemployment

A situation where a worker is willing to rate at the going wage rate but cannot find a job.

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Labour Force

All people who are of working age and able and willing to work. Includes both the employed and unemployed.

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Long-term Jobless

People who have been unemployed for at least 1 year.

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NAIRU

The rate of unemployment consistent with stable inflation.

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Occupational Immobility

Difficulties in learning new skills applicable to a new industry, and technological change.

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Participation Rate

Percentage (%) of the population of working age declaring themselves to be in the Labour Force.

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Phillips Curve

Shows a possible trade-off between inflation and unemployment.

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Real wage unemployment

Theory that wages above the market clearing equilibrium may cause unemployment.

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Structural Unemployment

Unemployment resulting from the decline in an industry which leaves people unemployed as they do not have the skills to move into another industry.

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Under-Employment

When people want to work full time but find that they can only get part-time work.

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Unemployment Rate

Proportion of the economically active population who are unemployed.

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Unemployment Trap

When the prospect of the loss of unemployment benefits dissuades those without work from taking a new job.

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Zero Hours Contracts

Jobs that do not guarantee a minimum number of working hours each week.

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List 4 SHORT Term Factors Of Economic Growth

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List 4 LONG Term Factors Of Economic Growth

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List 5 NEGATIVES Of Increasing GDP

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List 5 POSITIVES Of Increasing GDP

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Nominal GDP

The value of all goods and services produced in an economy in a year (not adjusted for inflation)

Real GDP

The value of all goods and services produced in an economy in a year (not adjusted for inflation)

What Is The Difference Between Real And Nominal GDP

Real GDP I sGDP adjusted for inflation, whereas Nominal GDP takes figures at face value.

What Is GNI

How Is GNI Measured

How Is GDP Measured

What Is The Informal Economy

List 5 Problems With Using GDP To Measure Living Standards

Economic Welfare

What Is The Easterlin Paradox

Deflation

Disinflation

Inflation

How Is Inflation Calculated In The UK Using CPI

Why Do Prices Rise/Fall

Demand Pull Inflation

Cost Push Inflation

Administered Prices

Give 4 Examples Of Demand Pull Inflation

Give 4 Examples Of Cost Push Inflation

Give 4 Examples Of Administered Prices

What Is An Internal Cause Of Inflation

What Is An External Cause Of Inflation

List 4 Internal Causes Of Inflation

List 4 External Causes Of Inflation

What Might Cause A Large Surge In Property Prices

Why Is Inflation A Bad Thing?

Who Benefits From High Inflation

Who Loses From High Inflation

List The 4 Types Of Unemployment

How Does Seasonal Unemployment Occur

How Does Structural Unemployment Occur

How Does Frictional Unemployment Occur

How Does Cyclical Unemployment Occur

What Are The Economic Costs Of High Unemployment

List A Beneficiary Of High Unemployment

List 3 Policies To Reduce Unemployment And INCREASE LABOUR DEMAND

List 3 Policies To Reduce Unemployment And Increase Labour Supply

List 3 Macro Stimulus Policies (Multiplier Effects)

List 3 Ways To Cut The Costs Of Employing Workers

List 3 Types Of Competitiveness Policies

List 3 Ways To Reduce Occupational Mobility

List 2 Ways To Improve Geographical Mobility

List 3 Ways To Stimulate Stronger Work Incentives

What Does S.P.I.C.E.D Stand For

In The UK What Are The Key Barriers To Reducing Unemployment

What Are 3 Disincentives Which Might Discourage People From Joining The Work Force

Aggregate Demand

Consumption

Investment

Aggregate

Domestic Economy

What Does An Aggregate Demand Curve Show?

Average Propensity To Consume

Average Propensity To Save

Propensity

Consumption Function

Disposable Income

Durable Goods

Marginal Propensity To Consume

Marginal Propensity To Save

Non-durable Goods

Savings Function

Saving (Personal)

Wealth Effect

Accelerator Coefficient

Accelerator Theory

Animal Spirits

Depreciation (Of The Capital Stock) Or Capital Consumption

Capital-output Ratio

Gross Investment

Net Investment

Retained Profit

Net Exports Or The Net Trade Balance

Aggregate Supply Curve

Full Capacity

Long-run Aggregate Supply Curve

Short-run Aggregate Supply Curve

Supply-side Shocks

Circular Flow Of Income

List 3 Features Of The Circular Flow Of Income

Closed Economy

Income

Injections

National Income

Open Economy

Wealth

Withdrawals Or Leakages

Marginal Propensity To Import (MPM)

Multiplier Effect/Process

Indicator

Signs of how an economy is performing.

List 4 Indicators

Growth Unemployment Inflation Trade

What Is The Government Objective For Trade

Balanced - Similar Level Of Imports As Exports

What Is The Government Objective For Inflation

Low And Stable 2%, (+-1%)

What Is The Government Objective For Unemployment

Low Unemployment, Full Employment

What Is The Government Objective For Growth

Strong, Sustained And Sustainable

Stability

The Key Objectives being met consistently and at the same time.

List 4 Core Objectives

Strong, sustained and sustainable growth Low Unemployment Low and stable inflation Balanced Trade

List 3 Examples Of Non-Core Government Objectives In The UK

Environmental Sustainability Productivity Growth

What Is An Injection In The Circular Flow Of Income

Money put into the economy that does not come from households.

Give 3 Examples Of Injections In The Circular Flow Of Income

Investment Government Spending Exports (Foreigners Spending)

What Is A Leakage In The Circular Flow Of Income

Money leaving the economy

Give 3 Examples Of Leakage In The Circular Flow Of Income

Savings Taxation Imports (Money spent abroad)

If Injections Are Equal To Leakages What Will Happen To The Economy

Balance, Macro-Economic Equilibrium

If Injections Are Greater Than Leakages What Will Happen To The Economy

More money will enter the economy than exit, resulting in economic growth

If Injections Are Less Than Leakages What Will Happen To The Economy

More money is leaving the economy than entering, resulting in decreasing economic growth.

Macro-Economic Equilibrium

Injections And Leakages are equal in an economy

In the Circular Flow Of Income, what are the 2 main parties.

HOUSEHOLDS FIRMS

What 2 things do households provide firms

Factors Of Production Consumer Expenditure

What 2 things do firms provide households

Goods And Services Factor Incomes (Work)

What are the 3 ways of measuring GDP

Output Method Income Method Expenditure Method

Output Method For GDP

Measuring the total value of all GOODS AND SERVICES in an economy

Income Method For GDP

Adding up the total value of all the

Expenditure Method For GDP

The total expenditure, consumer expenditure + investment + government spending + net exports (exports - imports) in an economy

What are the 4 things which can contribute to factor incomes

Wages and salaries Interest Profit Rent Paid to a person

In the circular flow of income is output, income and expenditure equal to each other?

Yes they are, all 3 ways of measuring GDP will result in the same answer.

Output=?=?

Output=Income=Expenditure