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Edexcel A Level Economics > Theme 2 > Flashcards

Theme 2 Flashcards

1
Q

Actual Growth

A

Economic growth measured by changes in real GDP

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2
Q

Aggregate demand

A

The total level of demand in an economy at any given price level at any given moment in time

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3
Q

Aggregate supply

A

The total amount of output n an economy at any given price ar any given moment in time

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4
Q

Animal spirits

A

The level of confidence of business owners

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5
Q

Balance of payments

A

A record of all financial dealings over a period of time between economic agents of one country and all other countries

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6
Q

Base year

A

A year chosen as a good comparison in a series of data when building an index; it is automatically given an index figure of 100

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7
Q

Boom

A

The peak of the business cycle, when growth is high

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8
Q

Budget

A

Where the government lays out its spending and taxation plans

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9
Q

Budget deficit

A

When the government spends more money than it receives

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10
Q

Budget surplus

A

When the government receives more money than it spends

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11
Q

Circular flow

A

A model of the economy which shows the flow of goods and services, the factors of production and money around the economy

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12
Q

Claimant count

A

A measure of unemployment: the number of people receiving benefits for being unemployed

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13
Q

Consumer price index

A

Official measure used to calculate the rate of inflation, using a weighted basket of goods

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14
Q

Consumption

A

Consumer spending on goods and services

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15
Q

Current account

A

A record of the payments for the purchase and sale of goods and services as well as income and transfers

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16
Q

Current account deficit

A

When more money leaves the country than enters, so the current account is negative

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17
Q

Current account surplus

A

When more money enters the country than leaves, so the current account is positive

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18
Q

Cyclical unemployment

A

Unemployment caused by a lack of AD

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19
Q

Deflation

A

A persistent fall in the prices of goods and services

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20
Q

Deflationary/contractionary policy

A

Fiscal or monetary policy which is aimed at reducing AD

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21
Q

Demand-pull inflation

A

Inflation caused by an increase in AD

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22
Q

Depreciation

A

The reduction in the value of machinery overtime

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23
Q

Direct tax

A

Taxes paid straight to the government by the individual taxpayer

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24
Q

Disinflation

A

A reduction in the rate of inflation

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25
Q

Disposable income

A

The money consumers have left to spend, after taxes have been taken away and benefits added

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26
Q

Economic growth

A

An increase in the long term productive potential of the economy; an increase in the amount of goods and services which are produced, measure by an increase in real GDP

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27
Q

Employed

A

Those in the labour force that have a job

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28
Q

Expansionary policy

A

Fiscal or monetary policy which is aimed at increasing AD

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29
Q

Export-led growth

A

Economic growth arising from an increase in exports

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30
Q

Fiscal policy

A

The use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance

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31
Q

Frictional unemployment

A

unemployment caused when people move between jobs and enter the job market

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32
Q

Gross domestic product

A

The value of goods and services produced in a country over a given period of time

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33
Q

GDP per capita

A

Total GDP divided by the population

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34
Q

Gross investment

A

Investment both to replace old machinery that has depreciated and to create/buy new ones

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35
Q

Gross National Income

A

The value of goods and services produced by a country over a period of time plus ner overseas interest payments and dividends

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36
Q

Gross national product

A

The value of goods and services produced by citizens of a country whether they live in the country or not

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37
Q

Government spending

A

Spending by the government on the provision of goods and services

38
Q

Imports

A

Goods and services bought from foreigners that takes income out of the country

39
Q

Inactive

A

Those neither employed nor unemployed; those not participating in the job market

40
Q

Income

A

A flow of assets

41
Q

Index number

A

Numbers allowing accurate comparisons to be made over time. The base year value is typically 100

42
Q

Indirect tax

A

Tax where the person charged with paying the money to the government is able to pass the cost onto someone else

43
Q

Inflation

A

The general rise in prices of goods and services that erodes the purchasing power of moeny

44
Q

Injection

A

Spending power entering the circular flow of income resulting from investment, government spending and exports

45
Q

Interventionist supply-side policies

A

Policies designed to correct market failure, where the government intervenes in the market

46
Q

Investment

A

Spending by businesses on capital goods, which leads to the creation of real goods

47
Q

Labour force survey

A

A measure of unemployment

48
Q

Living standards

A

The quality of life enjoyed by people in a country

49
Q

Long run

A

When all factors of production are variable

50
Q

Long run aggregate supply

A

The total output an economy can produce when operating at full output

51
Q

Long run trend rate of growth

A

The average sustainable rate of economic growth over a period of time

52
Q

Marginal propensity to consume

A

The proportion of an increase in income spent on consumption

53
Q

Marginal propensity to import

A

The proportion of an increase in income spent on imports

54
Q

Marginal propensity to save

A

The proportion of an increase in income that is saved

55
Q

Marginal propensity to tax

A

The proportion of an increase in income that is taken away in tax

56
Q

Marginal propensity to withdraw

A

The proportion of an increase in income that is withdrawn from the circular flow

57
Q

Market-based supply-side policies

A

Policies which are designed to remove anything which prevents the free market system working efficiently

58
Q

Monetary policy

A

The attempts of the central bank authority to control the level of AD by altering base interest rates or the amount of money in the economy

59
Q

Monetary policy committee

A

9 economists who meet monthly to set the BAnk rate as well as other monetary instruments

60
Q

Monetary supply

A

Stock of money in the economy

61
Q

Multiplier

A

An increase in injection will lead to an even grate increase in national income

62
Q

National expenditure

A

The value of spending by households on goods and services

63
Q

National income

A

The value of money paid by firms to households in return for land, labour, capital and enterprise

64
Q

National output

A

The value of the flow of goods and services from firms to households

65
Q

Negative output gap

A

When GDP is lower than predicted; the economy is producing below full output

66
Q

Net exports

A

Exports minus imports

67
Q

Net investment

A

Investment adjusted for depreciation; gross investment minus depreciation

68
Q

Nominal GDP

A

Gdp which does not take inlfation into account; GDP at current prices

69
Q

Output gap

A

The difference between the long term trend of growth and actual growth

70
Q

Positive output gap

A

When GDP is higher than predicted; the economy is producing above full output

71
Q

Potential growth

A

A change in the productive potential of the economy

72
Q

Purchasing power parity

A

Exchange rate of one currency to another that compares the cost of living in different countries through comparing a typical basket of goods

73
Q

Quantitative easing

A

When the central bank buys assets in exchange for money in an attempt to increase the money supply

74
Q

Real GDP

A

GDP adjuested for inflation

75
Q

Real wage unemployment

A

Unemployment caused when wages are set above the equilibrium wage rate

76
Q

Recession

A

The trough of the business cycle, when growth is low. It is where GDP falls in at least two successive quarters

77
Q

Retail price index

A

An old measure of inflation which has lost its national statistic status

78
Q

Savings

A

The decision by the consumer to postpone consumption

79
Q

Seasonal unemployment

A

Unemployment caused when an industry only operates during certain times of the year

80
Q

Short run

A

When at least one factor of production is fixed

81
Q

Short run aggregate supply

A

Aggregate supply when at least one factor of production is fixed

82
Q

Short run Philips curve

A

Shows the relationship between unemployment and inflation: higher levels of unemployment lead to lower levels of inflation

83
Q

Structural unemployment

A

Unemployment caused by the long term decline of an industry

84
Q

Supply-side policies

A

Government policies aimed at increasing the productive potential of the economy and shifting LRAS to the right

85
Q

Total GDP

A

The GDP of the while country

86
Q

Trade (business) cycle

A

The tendency of economic growth to rise and fall above and below the trench rate of economic growth, causing booms and busts

87
Q

Underemployment

A

Those who are working but are not working the amount of hours they would like or those employed below their skill level

88
Q

Unemployed

A

Those who are without work

89
Q

Value of GDP

A

Nominal values of GDP; GDP at current prices

90
Q

Volume of GDP

A

Real values of GDP; the size of the basket of goods

91
Q

Wealth

A

A stock of assets

92
Q

Withdrawal

A

Spending power leaving the circular flow of income resulting from savings, taxation and imports.

Edexcel A Level Economics (5 decks)

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