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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
inflation rate
% change in the price level | change in price level / original price level x 100
26
disinflation
rate of inflation is falling. for example 5% to 20% (price is not falling, it is increasing at a decreasing rate)
27
consumer price index
a measure of the general price level. excludes owner-occupier housing costs, used for inflation target (2% CPI) because can use for international comparison
28
retail price index
a measure of the general price level. includes other - occupier housing costs. eg. mortgages (uk only)
29
percentage change in real GDP
nominal GDP - inflation rate
30
negative economic growth
percentage decrease in real GDP
31
recession
two consecutive quarters of negative economic growth
32
potential economic growth
an expansion in the production capacity (max potential output) of the economy
33
RGDP per capita
measures 'average' income in a country and is calculated by: RDGP per capita = RGDP/ population
34
GNI (gross national income)
GNI = GDP + net property income from abroad (NPIA)
35
subjective happiness
feeling go wellness / good mood. in the uk happiness is measured using the national statistics (ONS) national wellbeing survey
36
Easterlin Paradox
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
standard of living / national well being
a measure of how well of an individual household or economy is
38
happiness index
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
exchange rate
value of one currency in terms of another currency
40
purchasing power parity (ppp) exchange rates
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
aggregated demand (AD)
the total amount of spending on goods and services produced in an economy during a period of time
42
net export / trade balance / trade position
value of exports - value of imports (x-m)
43
trade deficit
when value of exports < value of imports
44
trade surplus
when value of exports > value of imports
45
consumer expenditure
total planned household spending on consumer products
46
disposable income
income remaining after deduction of taxes and social security (benefits)
47
discretionary income
income remaining after deduction of taxes, social security charges, and basic living costs e.g. mortgage interest repayments.
48
unemployment
out of work but willingly and able to work
49
unemployment rate
total employment / labour force x 100
50
employment
those people in work
51
under - employment
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
economically active
those people who are willing and able to work
53
economically inactive
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
employment rate
number of people employed / working age population x 100
55
activity rate (participation rate)
active population / working age population x 100
56
active population
number of employed people + number of unemployed people
57
claimant count
measurement of unemployment
58
ILO Labour force
measurement of unemployment
59
average propensity to consume (APC)
the proportion of income that households devote to consumption change in consumption / household income
60
marginal propensity to consume (MPC)
the proportion of ADDITIONAL income devoted to consumption | change in consumption / change in income
61
marginal propensity to save (MPS)
the proportion of ADDITIONAL income devoted to saving | 1- MPC
62
assets (CFOI)
items that you own
63
depreciation
loss in value of capital through use
64
gross investment
total investment on new capital inputs
65
net investment
gross investment adjusted for depreciation | = gross investment - depreciation
66
interest rate
cost pf borrowing and return on saving
67
consumer confidence
an economic indicator that measures consumer confidence in job security and personal finance situation
68
household debt
money borrowed by individuals, usually from banks or financial institutions. This includes mortgages, personal loans, student loans, credit card balance
69
savings ratio
the ratio of personal savings to income
70
corporation tax
tax paid on firms profits
71
business confidence
a measure of the firms' expectations about future sales/profits
72
government spending
spending by the government on capital goods and services. it includes current, capital, welfare and debt interest spending
73
current spending
spending on maintenance of public services and payment on public sector wages
74
capital spending
spending on infrastructure projects
75
welfare spending
spending on benefits and pensions
76
budget deficit
gov. spending > tax revenue in a fiscal year
77
badget surplus
gov. spending < tax revenue in a fiscal year
78
budget position
the difference between gov. spending and tax revenue = gov. spending - tax revenue
79
national debt
total stock of debt over time and an accumulation of budget deficits

A-level Edexcel Economics (2 decks)

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