Theme 2: The UK Economy - Performance and Policies Definitions Flashcards
Actual growth
Economic growth measured by changes in real GDP
Aggregate demand (AD)
The total level of demand in an economy at any given price at a moment in time
Animal spirits
The level of confidence of business owners
Aggregate supply (AS)
The total amount of output in the economy at any given price at a moment in time
Balance of payments
A record of all financial dealings over a period of time between economic agents of one country and another
Base year
A year chosen as a good comparison in series of data when building an index; it is automatically given an index figure of 100
Budget
Where the government lays out their spending and taxation plans
Boom
The peak of the business cycle, when growth is high
Budget deficit
When the government spends more money than it receives
Budget surplus
When the government receives more money than it spends
Circular flow
A model of the economy which shows the flow of goods and services, the factors of production and money around the economy
Claimant count
A measure of unemployment; the number of people receiving benefits for being unemployed
Consumer Price Index (CPI)
Official measure used to calculate the rate of inflation, using a weighted basket of goods.
Consumption
Consumer spending on goods and services
Cost push inflation
Inflation caused by a decrease in AS
Current account
A record of the payments for the purchase and sale of goods and services, as well as income and transfers
Current account deficit
When more money leaves the country than enters, so the current account is negative
Current account surplus
When more money enters the country than leaves, so the current account is positive
Deflation
A persistent fall in prices of goods and services
Cyclical unemployment
Unemployment caused by a lack of AD
Deflationary policy
Fiscal or monetary policy which is aimed at reducing AD
Demand pull inflation
Inflation caused by an increase in AD
Direct tax
Taxes paid straight to the government by the individual taxpayer
Depreciation
The reduction in the value of machinery overtime
Disinflation
A reduction in the rate of inflation
Disposable income
The money consumers have left to spend, after taxes have been taken away and benefits added
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
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)
Expansionary policy
Fiscal or monetary policy which is aimed at increasing AD
Exports
Goods or services sold to foreigners that bring income into the country
Fiscal policy
The use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance
Export-led growth
Economic growth arising from an increase in exports
Frictional unemployment
Unemployment caused when people move between jobs and enter the job market
Gross Domestic Product (GDP)
The value of goods and services produced in a country over a given period of time
GDP per capita
Total GDP divided by the population
Gross investment
Investment both to replace old machinery that has depreciated and to create/buy new ones
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