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A-level Edexcel Economics > Theme 2 Macro economics definitions > Flashcards

Theme 2 Macro economics definitions Flashcards

1
Q

wealth

A

STOCK OF ASSETS for example, house, savings, shares, land

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2
Q

income

A

the FLOW OF MONEY a person/ household/economy receives every year, (includes wages, profit, interest, rent and dividends)

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3
Q

factor incomes

A

money paid by firms into households in return for factors of production (wages, profit, interest, rent)

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4
Q

circular flow of income

A

a model of the economy which shows the movement of goods and services between households and firms (1) and their corresponding payments in money terms (1)

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5
Q

national output

A

total value of goods and services produced in an economy in a period of time

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6
Q

national income

A

total income received by the factors of production in an economy in a period of time (wages, rent, interest, profit)

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7
Q

national expenditure

A

total spending on goods and services

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8
Q

nominal GDP

A

measured using current prices (not adjusted for inflation)

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9
Q

real GDP

A

adjusted for inflation

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10
Q

RGDP growth

A

nominal GDP growth - inflation time

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11
Q

percentage change

A

difference / original x 100

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12
Q

actual economic growth

A

rate of increase of RGDP

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13
Q

injections

A

where money flows into the circular flow of income for example government spending, investment and export revenue

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14
Q

leakages

A

where money flows out of the circular flow of income for example, taxation, saving and import receipts

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15
Q

government spending

A

the government spends money on goods and services for example., the provision of police, healthcare and defence

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16
Q

investment

A

spending by firms on capital goods for example new buildings and machinery

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17
Q

export

A

good or service produced in economy and sold adroad eg. Nissan cars (sunderland) and Lloyds banking. tourism is classified as an export

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18
Q

import

A

goods or services brought from abroad ed. consumer electronics from china, clothing from Bangladesh, oil from Saudi Arabia and wine from France. total amount spent on imports is called ‘import receipts’

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19
Q

index numbers

A

an index takes one number within a series as 100, then relates all other numbers to that 100 base period
index number = current value / base year value x 100

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20
Q

price level

A

the average level of prices of products in an economy

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21
Q

inflation

A

a sustained increase in the general price level in an economy

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22
Q

purchasing power

A

the value of a currency expressed in terms of the amount of goods and services that one unit of money can buy

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23
Q

hyperinflation

A

an inflation rate above 50 %

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24
Q

deflation

A

a decrease in price level

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25
Q

inflation rate

A

% change in the price level

change in price level / original price level x 100

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26
Q

disinflation

A

rate of inflation is falling. for example 5% to 20% (price is not falling, it is increasing at a decreasing rate)

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27
Q

consumer price index

A

a measure of the general price level. excludes owner-occupier housing costs, used for inflation target (2% CPI) because can use for international comparison

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28
Q

retail price index

A

a measure of the general price level. includes other - occupier housing costs. eg. mortgages (uk only)

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29
Q

percentage change in real GDP

A

nominal GDP - inflation rate

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30
Q

negative economic growth

A

percentage decrease in real GDP

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31
Q

recession

A

two consecutive quarters of negative economic growth

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32
Q

potential economic growth

A

an expansion in the production capacity (max potential output) of the economy

33
Q

RGDP per capita

A

measures ‘average’ income in a country and is calculated by:
RDGP per capita = RGDP/ population

34
Q

GNI (gross national income)

A

GNI = GDP + net property income from abroad (NPIA)

35
Q

subjective happiness

A

feeling go wellness / good mood. in the uk happiness is measured using the national statistics (ONS) national wellbeing survey

36
Q

Easterlin Paradox

A

as income increases, happiness increases up to a certain point as people are able to afford important items like food and a home, however, the marginal happiness from extra £ of income then begins to fall as people spend money on things they don’t need and brings less happiness

37
Q

standard of living / national well being

A

a measure of how well of an individual household or economy is

38
Q

happiness index

A

happiness index is measured using parameters like housing, income, work, community, civic engagement, education, environment, health, life satisfaction, safety and work-life balance. people are chosen to complete a survey and to rate the above parameters

39
Q

exchange rate

A

value of one currency in terms of another currency

40
Q

purchasing power parity (ppp) exchange rates

A

the rate at which the currency of one country would have to be converted Into that of another country to buy the same amount of goods and services in each country.
comparison between countries, taking into account the different costs of living

41
Q

aggregated demand (AD)

A

the total amount of spending on goods and services produced in an economy during a period of time

42
Q

net export / trade balance / trade position

A

value of exports - value of imports (x-m)

43
Q

trade deficit

A

when value of exports < value of imports

44
Q

trade surplus

A

when value of exports > value of imports

45
Q

consumer expenditure

A

total planned household spending on consumer products

46
Q

disposable income

A

income remaining after deduction of taxes and social security (benefits)

47
Q

discretionary income

A

income remaining after deduction of taxes, social security charges, and basic living costs e.g. mortgage interest repayments.

48
Q

unemployment

A

out of work but willingly and able to work

49
Q

unemployment rate

A

total employment / labour force x 100

50
Q

employment

A

those people in work

51
Q

under - employment

A

someone who is currently in employment but wants to work more hours (working less hours than they would like or are in second - choice occupations)

52
Q

economically active

A

those people who are willing and able to work

53
Q

economically inactive

A

those aged between 16 and 64 who are not available for work, or not looking for work . this includes full-time students, early retirement, homemakers, sick or disabled and discouraged workers.

54
Q

employment rate

A

number of people employed / working age population x 100

55
Q

activity rate (participation rate)

A

active population / working age population x 100

56
Q

active population

A

number of employed people + number of unemployed people

57
Q

claimant count

A

measurement of unemployment

58
Q

ILO Labour force

A

measurement of unemployment

59
Q

average propensity to consume (APC)

A

the proportion of income that households devote to consumption
change in consumption / household income

60
Q

marginal propensity to consume (MPC)

A

the proportion of ADDITIONAL income devoted to consumption

change in consumption / change in income

61
Q

marginal propensity to save (MPS)

A

the proportion of ADDITIONAL income devoted to saving

1- MPC

62
Q

assets (CFOI)

A

items that you own

63
Q

depreciation

A

loss in value of capital through use

64
Q

gross investment

A

total investment on new capital inputs

65
Q

net investment

A

gross investment adjusted for depreciation

= gross investment - depreciation

66
Q

interest rate

A

cost pf borrowing and return on saving

67
Q

consumer confidence

A

an economic indicator that measures consumer confidence in job security and personal finance situation

68
Q

household debt

A

money borrowed by individuals, usually from banks or financial institutions. This includes mortgages, personal loans, student loans, credit card balance

69
Q

savings ratio

A

the ratio of personal savings to income

70
Q

corporation tax

A

tax paid on firms profits

71
Q

business confidence

A

a measure of the firms’ expectations about future sales/profits

72
Q

government spending

A

spending by the government on capital goods and services. it includes current, capital, welfare and debt interest spending

73
Q

current spending

A

spending on maintenance of public services and payment on public sector wages

74
Q

capital spending

A

spending on infrastructure projects

75
Q

welfare spending

A

spending on benefits and pensions

76
Q

budget deficit

A

gov. spending > tax revenue in a fiscal year

77
Q

badget surplus

A

gov. spending < tax revenue in a fiscal year

78
Q

budget position

A

the difference between gov. spending and tax revenue

= gov. spending - tax revenue

79
Q

national debt

A

total stock of debt over time and an accumulation of budget deficits

A-level Edexcel Economics (2 decks)

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