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IGCSE Economics > Unit 4 Government and the Macroeconomy > Flashcards

Unit 4 Government and the Macroeconomy Flashcards

1
Q

Local government

A

a government organisation with the authority to administer a range of policies within an area of the country

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2
Q

Natural monopoly

A

an industry where a single firm can produce at a lower average cost than two or more firms because of the existence of significant economies of scale

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3
Q

Strategic industries

A

industries are important for the economic development and safety of the country

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4
Q

National champions

A

industries that are, or have the potential to be, world leaders

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5
Q

Trade blocs

A

a regional group of countries that remove trade restrictions between them

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6
Q

Free international trade

A

the exchange of goods and services between countries without restriction

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7
Q

Economic growth

A

an increase in the output of an economy in the long run, an increase in the economy’s productive potential

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8
Q

Actual economic growth

A

an increase in the output of an economy

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9
Q

Potential economic growth

A

an increase in an economy’s productive capacity

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10
Q

Aggregate demand

A

the total demand for a country’s product at a given price level. It consists of consumer expenditure, investment, government spending and net exports (exports-imports)

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11
Q

Aggregate supply

A

the total amount of goods and services that domestic firms are willing to supply at a given price level

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12
Q

Full employment

A

the lowest level of unemployment possible

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13
Q

Economically active

A

being a member of the labour force

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14
Q

Unemployment rate

A

the percentage of the labour force who are willing and able to work but are without jobs

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15
Q

Price stability

A

the price level in the economy not changing significantly over time

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16
Q

Inflation rate

A

the percentage rise in the price level of goods and services over time

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17
Q

Balance of payments

A

the record of a country’s economic transactions with other countries

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18
Q

Budget

A

the relationship between government revenue and government spending

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19
Q

Budget deficit

A

government spending is higher than government revenue

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20
Q

Budget surplus

A

government revenue is higher than government spending

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21
Q

National debt

A

the total amount the goverment has borrowed over time

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22
Q

Multiplier effect

A

the final impact on aggregate demand being greater than initial change

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23
Q

Direct taxes

A

taxes on income and wealth

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24
Q

Indirect taxes

A

taxes on expenditure

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25
Q

Progressive tax

A

one which takes a larger percentage of the income or wealth of the rich

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26
Q

Proportional tax

A

one which takes the same percentage of income or wealth of all taxpayers

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27
Q

Regressive tax

A

one which takes a larger percentage of the income or wealth of the poor

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28
Q

Automatic stabilisers

A

forms of government expenditure and taxations that reduce fluctuations in economic activity, without any change in government policy

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29
Q

Inflation

A

the rise in the price level of goods and services over time

30
Q

Informal economy

A

that part of the economy that is not regulated, protected or taxed by the government

31
Q

Flat taxes

A

taxes with a single rate

32
Q

Fiscal policy

A

decisions on government spending and taxation designed to influence aggregate demand

33
Q

Expansionary fiscal policy

A

rises in government expenditure and/or cuts in taxation designed to increase aggregate demand

34
Q

Contractionary fiscal policy

A

cuts in government expenditure and/or rises in taxation designed to reduce aggregate demand

35
Q

Monetary policy

A

decisions on the money supply, the rate of interest and the exchange rate taken to influence aggregate demand

36
Q

Foreign exchange rate

A

the price of one currency in terms of anther currency or currencies

37
Q

Expansionary monetary policy

A

increases in the money supply and/or the reduction in the rate of interest designed to increase aggregate demand

38
Q

Contractionary monetary policy

A

cuts in the money supply or growth of money supply and/or rises in the rate of interest designed to reduce aggregate demand

39
Q

Supply-side policy

A

measures designed to increase aggregate supply

40
Q

Deregulation

A

the removal of rules and regulations

41
Q

Gross domestic product (GDP)

A

the total output of a country

42
Q

Circular flow of income

A

the movement of expenditure, income and output around the economy

43
Q

Value added

A

the difference between the sales revenue received and the cost of raw materials used.

44
Q

Transfer payments

A

transfers of income from one group to another not in return for providing a good or service

45
Q

Nominal GDP

A

GDP at current market prices and so, not adjusted for inflation

46
Q

Real GDP

A

GDP at constant prices and so, adjusted for inflation

47
Q

Subsistence agriculture

A

the output agricultural goods for farmers’ personal use

48
Q

Recession

A

a reduction in real GDP over a period of six months or more

49
Q

Sustainable economic growth

A

economic growth that does not endanger the country’s ability to grow in the future

50
Q

Employment

A

being involved in a productive activity for which a payment is received

51
Q

Unemployment

A

being without a job while willing and able to work

52
Q

Claimant count

A

a measure of unemployment which counts as unemployed these in receipt of unemployment benefits

53
Q

Labour force survey (ILO) Measure

A

a measure of unemployment which counts as unemployed people who identify as such in a survey

54
Q

Frictional unemployment

A

temporary unemployment arising from workers being in between jobs

55
Q

Structural unemployment

A

unemployment caused by long-term changes in the pattern of demand and methods of production

56
Q

Cyclical unemployment

A

unemployment caused by a lack of aggregate demand

57
Q

Search unemployment

A

unemployment arising from workers who have lost their jobs, looking for a job they are willing to accept

58
Q

Casual unemployment

A

unemployment arising from workers regularly being between periods of employment

59
Q

Seasonal unemployment

A

unemployment caused by a fall in demand at particular times of the year

60
Q

Regional unemployment

A

unemployment caused by a decline in job opportunities in a particular area of the country

61
Q

Technological unemployment

A

unemployment caused by workers being replaced by capital equipment

62
Q

Deflation

A

a sustained fall in the prices of goods and services

63
Q

Disinflation

A

a fall in the rate of inflation

64
Q

Cost-push inflation

A

rises in the price level caused by higher costs of production

65
Q

Demand-pull inflation

A

rises in the price level caused by excess demand

66
Q

Wage-price spiral

A

wage rises leading to higher prices, in turn, lead to further wage claims and price rises

67
Q

Monetary inflation

A

rises in the price level caused by an excessive growth of the money supply

68
Q

Hyperinflation

A

a very rapid and large rise in the price level

69
Q

Index-linking

A

changing payments in line with changes in the inflation rate

70
Q

Menu costs

A

costs involved in having to change prices as a result of inflation

71
Q

Shoe-leather costs

A

costs involved in moving money around to gain higher interest rates

IGCSE Economics (6 decks)

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