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Theme 2 definitions Flashcards

1
Q

Actual growth

A

Economic growth measured by changes in real GDP

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2
Q

Aggregate demand (AD)

A

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

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3
Q

Aggregate supply (AS)

A

The total amount of output in the economy at any given price at a 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 another

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6
Q

Base year

A

A year chosen as a good comparison in 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 their 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 (CPI)

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

Cost push inflation

A

Inflation caused by a decrease in AS

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16
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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17
Q

Current account deficit

A

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

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18
Q

Current account surplus

A

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

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19
Q

Cyclical unemployment

A

Unemployment caused by a lack of AD

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20
Q

Deflation

A

A persistent fall in prices of goods and services

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21
Q

Deflationary policy

A

Fiscal or monetary policy which is aimed at reducing AD

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22
Q

Demand pull inflation

A

Inflation caused by an increase in AD

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23
Q

Depreciation

A

The reduction in the value of machinery overtime

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24
Q

Direct tax

A

Taxes paid straight to the government by the individual taxpayer

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25
Disinflation
A reduction in the rate of inflation
26
Disposable income
The money consumers have left to spend, after taxes have been taken away and benefits added
27
Economic growth
An increase in the long term productive potential in the economy; an increase in the amount of goods and services which are produced, measured by an increase in real GDP
28
Employed
Someone who does more than 1 hour of paid work a week or is temporarily away from work, on a government supported training scheme or does a minimum of 15 hours unpaid work for their family business (ILO definition)
29
Expansionary policy
Fiscal or monetary policy which is aimed at increasing AD
30
Exports
Goods or services sold to foreigners that bring income into the country
31
Export-led growth
Economic growth arising from an increase in exports
32
Fiscal policy
The use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance
33
Frictional unemployment
Unemployment caused when people move between jobs and enter the job market
34
Gross Domestic Product (GDP)
The value of goods and services produced in a country over a given period of time
35
GDP per capita
Total GDP divided by the population
36
Gross investment
Investment both to replace old machinery that has depreciated and to create/buy new ones
37
Gross National Income (GNI)
The value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends
38
Gross National Product (GNP)
The value of goods and services produced by citizens of a country, whether they live in the country or not.
39
Government spending
Spending by the government for the provision of goods and services
40
Imports
Goods and services bought from foreigners that takes income out of the country
41
Inactive
Those neither employed nor unemployed; those not participating in the job market
42
Income
A flow of assets
43
Index number
Numbers allowing accurate comparisons over time to be made. The base year value is typically 100
44
Indirect tax
Tax where the person charged with paying the money to the government is able to pass on the cost to someone else
45
Inflation
The general rise in prices of goods and services that erodes the purchasing power of money
46
Injection
Spending power entering the circular flow of income resulting from investment, government spending and exports
47
Interventionist supply side policies
Policies designed to correct market failure, where the government intervenes in the market
48
Investment
Spending by businesses on capital goods, which leads to the creation of real goods
49
Living standards
The quality of life enjoyed by people in a country
50
Long run
When all factors of production are variable
51
Long run aggregate supply (LRAS)
The total output an economy can produce when operating at full output
52
Long run trend growth rate
The average sustainable rate of economic growth over a period of time
53
Marginal propensity to import
The proportion of an increase in income spent on imports
54
Marginal propensity to save
The proportion of an increase in income that is saved
55
Marginal propensity to tax
The proportion of an increase in income that is taken away in tax
56
Labour Force Survey
A measure of unemployment which surveys people to class them as unemployed, employed or inactive under the International Labour Organisation (ILO) definitions
57
Marginal propensity to consume
The proportion of an increase in income spent on consumption ## Footnote change in consumption/change in income
58
Marginal propensity to withdraw
The proportion of an increase in income that is withdrawn from the circular flow
59
Market-based supply-side policies
Policies which are designed to remove anything which prevents the free market system working efficiently
60
Monetary Policy Committee (MPC)
9 economists who meet monthly to set the Bank rate as well as other monetary instruments
61
Monetary supply
Stock of money in the economy
62
National expenditure
The value of spending by households on goods and services
63
National income
The value of income paid by firms to households in return for land, labour, capital and enterprise
64
National output
The value of the flow of goods and services from firms to households
65
Negative output gap
When GDP is lower than predicted; the economy is producing below full output
66
Net exports
Exports minus imports
67
Net investment
Investment adjusted for depreciation; gross investment minus depreciation
68
Nominal GDP
GDP which does not take inflation into account; GDP at current prices
69
Output gap
The difference between the long term trend rate of growth and actual growth
70
Positive output gap
When GDP is higher than predicted; the economy is producing above full output
71
Potential growth
A change in the productive potential of the economy
72
Purchasing power parity
Exchange rate of one currency to another that compares the cost of living in different countries through comparing a typical basket of goods
73
Quantitative easing
When the central banks buys assets in exchange for money in an attempt to increase the money supply
74
Real GDP
GDP which strips out the effect of inflation
75
Monetary policy
The attempts of the central bank/regulatory authority to control the level of AD by altering base interest rates or the amount of money in the economy
76
Multiplier
An increase in an injection will lead to an even greater increase of national income ## Footnote 1 = 1/(1-MPC) MPW
77
Real wage unemployment
Unemployment caused when wages are set above the equilibrium wage rate
78
Recession
The trough of the business cycle, when growth is low. The government defines it as where real GDP falls in at least two successive quarters
79
Retail Price Index (RPI)
An old measure of inflation which has lost its national statistic status
80
Savings
The decision by consumers to postpone consumption
81
Seasonal unemployment
Unemployment caused when an industry only operates during certain times of the year
82
Short run
When at least one factor of production is fixed
83
Short run aggregate supply (SRAS)
Aggregate supply when at least one factor of production is fixed
84
Short run Phillips curve
Shows the relationship between unemployment and inflation: higher levels of unemployment lead to lower levels of inflation
85
Structural unemployment
Unemployment caused by the long-term decline of an industry
86
Supply-side policies
Government policies aimed at increasing the productive potential of the economy and shifting LRAS to the right
87
Total GDP
The GDP of the whole country
88
Trade (business) cycle
The tendency of economic growth to rise and fall above and below the trend rate of economic growth, causing booms and busts
89
Unemployed
Those who are without work, able to start work in the next 2 weeks and have actively sought work for the last 4 weeks (ILO definition)
90
Value of GDP
Nominal values of GDP; GDP at current prices
91
Volume of GDP
Real values of GDP; the size of the basket of goods
92
Wealth
A stock of assets
93
Withdrawal
Spending power leaving the circular flow of income resulting from savings, taxation and imports.

Macroeconomics (14 decks)

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