u2 definations Flashcards
economic growth
unemployment
inflation
balance of payments
national income
gross domestic product
the value of all final goods and services produced in an economy within a given time period
black market / hidden market
gdp / capita
fdi / foreign direct investment
gni / gross national income
total income generated by a countries factors of production, regardless of location
net factor income
income earned by domestic workers regardless of location - foreign income
green gdp
nominal gdp
real gdp
value
refers to the monetary worth
of goods and services produced, expressed in currency
volume
refers to the actual quantity of goods and services produced. It doesn’t consider price changes
basic price change
indirect taxes minus subsidies
net national income
gross national income, adjusted for depreciation
transfer payments
purchasing power
PPP ( purchasing power parity)
absolute PPP
relative PPP
economic growth rate
rate of change of real gdp
recession
an economy has experienced negative economic growth over at least two consecutive quarters
depression
a sustained period of significant economic decline
human development index
statistic by UN to assess a country’s overall progress in terms of social and economic well-being
inflation
persistent and general increase of prices in an economy
deflation
persistent and general decrease of prices in an economy over a year
disinflation
a fall in the rate of inflation. its a decreased rate of inflation, but inflation still exists
hyperinflation
where the prices of all goods and services rise uncontrollably over a defined time period
reflation
rise of gdp that occurs following a recession
stagflation
a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high
consumer price index or CPI
producer wholesale price index (PPI)
used to measure the change in the price of typical basket of goods bought and sold by the manufacturers of an economy
demand pull inflation
Excess demand for goods and services
cost push inflation
Increase in production costs for businesses
the population of working age
all people within a certain age range, between statutory age for leaving school and state retirement age
unemployed
those without job, who want a job and have actively looked for work in the last 4 weeks and are available to work in the next 2 weeks
employed
those who have work, and work for atleast 1 hour of paid work per week
the labour force
made up of those in employment and those unemployed, the economically active population
active population
those in work or actively seeking work, also known as the
labour force
underemployed
those who want to work more hours but cant find the work
frictional unemployment
structural unemployment
seasonal unemployment
cyclical unemployment
Real wage inflexibility
refers to the stickiness of wages in an economy, meaning they don’t adjust quickly
to changes in economic conditions, particularly inflation
Demand-side
refers to the demand for labour from firms
supply side
refers to the supply for labour for firms
shoe leather costs
the indirect costs people incur when they hold less cash due to high inflation.
It’s a metaphorical term referencing the idea that more frequent trips to the bank (which involved more walking in the past) would wear out your shoes faster.
balance of payments
the capital inflow and outflow of a country from international transaction over a period of time
balance of trade of goods
the difference between the value of visible exports and visible imports of goods
balance of trade of services
difference between value of invisible exports and invisible imports of services
primary income
income that results from the loan of factors of production
abroad.
secondary income
is when income is transferred between countries. Money is
received without a corresponding output.
trade in goods / trade in visible
trade in raw materials, semi manufactured and finished manufactured goods
aggregate demand
total demand or expenditure in an economy at a given price
wealth effect
as real wealth falls, consumption falls
savings ratio
proportion of disposable income that people save
gross investment
the total amount of money spent on acquiring new assets that will be used for production in the future.
investment
when firms spend on capital goods
net investment
represents the
actual addition to the economy’s capital stock after accounting for depreciation, reflects net increase in productive capacity as a result of investment
keynesian theory of consumption
income is the most important determinant of consumption - as income rises, households prefer to save more and consumption falls
accelerator effect
effects relationship between planned capital investment and the rate of change of national income
circular flow of income
the movement of spending and income throughout the economy
multiplier
process where any shift in AD will lead to an even greater shift in national output
mpc
proportion of additional income that a person or household spends on consumption rather than saving it
output gap
difference between actual level of real gdp and estimated long term value
fdi
flows of money between countries where one firm buys or sets up anther firm in another country, its a method of injection
