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Economics A2 > Unit two: key words > Flashcards

Unit two: key words Flashcards

1
Q

Accelerator effect

A

The relationship between the change in new investment and the rate of change of national income.

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2
Q

Aggregate demand

A

Total planned expenditure in the economy, C+I+G+ (X-M).

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3
Q

Aggregate supply

A

The total value/amount of goods and services supplied in an economy.

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4
Q

Balance of payments

A

A record of a country’s international transactions over a year.

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5
Q

Balance of trade

A

Visible exports minus visible imports.

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6
Q

Balanced budget

A

Where government receipts equal government spending in a fiscal year.

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7
Q

Broad money

A

Money held in banks and building societies that is not immediately accessible.

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8
Q

Budget deficit

A

Where government spending exceeds government receipts in a fiscal year.

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9
Q

Budget surplus

A

Where government receipts exceed government spending in a fiscal year.

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10
Q

Central bank

A

The financial institution typically responsible for setting short-term interest rates and issuing notes and coins.

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11
Q

Circular flow of income

A

Model explaining the equilibrium level of national income.

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12
Q

Claimant count

A

A measure of unemployment based upon the number claiming unemployment benefits.

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13
Q

Consumption

A

Spending by domestic households on goods and services.

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14
Q

Cost-push inflation

A

Where increased costs of production result in firms increasing their prices, leading to an increase in the general price level.

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15
Q

CPI

A

Consumer price index. Used since 2004 as the target measure for inflation by the MPC of the Bank of England.

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16
Q

Credit crunch

A

When borrowing becomes more expensive or unavailable.

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17
Q

Cyclical unemployment

A

Demand-deficient unemployment that results from a downturn in the eco. cycle.

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18
Q

Deindustrialisation

A

A fall in the proportion of national output accounted for by the manufacturing sector of the economy.

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19
Q

Demand management

A

Using monetary and fiscal policy to control aggregate demand to minimise fluctuations in the economic cycle.

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20
Q

Demand-pull inflation

A

Where aggregate demand exceeds aggregate supply leading to an increase in the price level.

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21
Q

Deregulation

A

The process of removing government controls from markets.

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22
Q

Discretionary fiscal policy

A

The deliberate manipulation of government spending and taxation to influence the economy.

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23
Q

Disposable income

A

Income available to households after the payment of income tax and national insurance contributions.

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24
Q

Economic cycle

A

The tendency for economic growth to fluctuate over time.

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25
Q

Economic growth

A

An increase in the productive capacity of a nation over time.

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26
Q

Exchange rate

A

The price of one currency expressed in terms of another.

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27
Q

Exports

A

Goods or services sold abroad.

28
Q

Fiscal policy

A

Control of the economy via the use of taxation and government spending.

29
Q

Frictional unemployment

A

People between jobs, i.e. engaged in job search.

30
Q

GDP

A

Gross Domestic Product. The total value of goods and services produced in the economy.

31
Q

Geographical immobility

A

Where workers find it difficult to move to where employment opportunities may be, e.g. due too family ties and differences in housing costs.

32
Q

Globalisation

A

The ability to produce goods anywhere in the world and sell them in any country.

33
Q

‘Hot money’

A

Money that is liable to rapid transfer from one country to another.

34
Q

Human capital

A

The skills, abilities, knowledge and motivation of labour.

35
Q

Imports

A

Purchases of goods and services from abroad.

36
Q

Income

A

A flow of earnings to a factor of production over a period of time, e.g. salary.

37
Q

Inflation

A

A persistent increase in the general price level.

38
Q

Injection

A

Money that originates outside the circular flow of income and so boosts national income.

39
Q

Interest rate

A

The cost of borrowing, the reward for saving or the opportunity cost of spending.

40
Q

Investment

A

Spending by firms on new capital equipment.

41
Q

Macroeconomics

A

Study of the economy as a whole.

42
Q

Monetary policy

A

Controlling the economy via changes in interest rates and the money supply.

43
Q

Mortgage

A

Loan to buy a property.

44
Q

MPC

A

The Monetary Policy Committee of the Bank of England, made up of economists and bankers, who meet monthly to decide whether or not to alter the base rate of interest.

45
Q

Money supply

A

The total amount of money in an economy.

46
Q

Multiplier effect

A

Where an increase or decrease in spending leads to a larger than proportional change in national income.

47
Q

Narrow money

A

Notes, coins and balances available for current transactions.

48
Q

Negative equity

A

Situation where the value of one’s house is lower than the outstanding mortgage.

49
Q

Negative output gap

A

Where the economy is producing less than its trend output.

50
Q

Nominal

A

Not adjusted for inflation.

51
Q

Occupational immobility

A

Where workers find it difficult to secure ‘new’ jobs as patterns of demand and employment change, as they lack the necessary skills.

52
Q

Participation rate

A

Proportion of the country’s working age population that makes up the labour force.

53
Q

Positive output gap

A

When actual GDP exceeds the trend rate of GDP, increasing inflationary pressure.

54
Q

Privatisation

A

Sale of government-owned assets to the private sector.

55
Q

Real GDP

A

Gross domestic product, adjusted for the effects of inflation.

56
Q

Recession

A

2 or more quarters of negative growth of GDP.

57
Q

Structural unemployment

A

Unemployment caused by a change in the pattern of demand in an economy.

58
Q

Subsidy

A

A payment made by government to producers to encourage greater production of a good or service.

59
Q

Supply-side policies

A

A range of measures designed to increase aggregate supply by improving the efficiency of markets.

60
Q

Tariff

A

A tax on imports.

61
Q

Transmission mechanism

A

How changes in the base rate of interest influence the components of aggregate demand.

62
Q

Unemployment

A

Those of working age who are willing and able to work who do not currently have a job.

63
Q

Unemployment trap

A

Where individuals receive more in benefit payments than they would in income in employment.

64
Q

Voluntary unemployment

A

Workers not prepared to take a job at current wage rates.

65
Q

Wealth

A

A stock of owned assets, e.g. housing property, shares.

66
Q

Wealth effect

A

Where a rise in the value of household wealth encourages consumers to spend more and save less.

67
Q

Withdrawals

A

Money taken out of the circular flow of income, which reduces national income.

Economics A2 (5 decks)

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