Vocab unit 2 Flashcards
Imports
Goods and services purchased from abroad
Inflation
A persistent increase in the level of prices
Injections
Money that originates outside the circular flow and so will increase national income/output/expenditure
Interest rates
The cost of borrowing or reward of savings
Investment
Investment is spending by firms in buildings, machinery and improving the skills of the labour force
Withdrawals
Any money not passed on in the circular flow and has the effect or reducing national income/output/expenditure
Unemployment
Those without a job but who are seeking work at current wage rates
The Euro Zone
The countries that have adopted the euro as their sole currency
Balance of payments deficit
More is imported than exported
Circular flow
A model to show the circulation of income between consumers and producers
Consumer spending
The money spent by people after tax has been taken by the government
Economic growth
The capacity of an economy to produce more goods and services over time
Economic systems
Economic systems are the organisations that guide the economy of the commodity
Floating Exchange Rate
An exchange rate where a countries currency is allowed to fluctuate according to the foreign exchange markets
Government spending
The money spent by the government on public services such as defence and health (1=benefits 2=NHS)
Government revenue
The money received by government through taxes (1=income 2=VAT 3= Corporation tax)
GDP/GNP
The entire income of a country
Exports
Good and services sold abroad
Equilibrium
The price at which demand is equal to supply and there are no tendencies to change
Fixed Exchange Rate
An exchange rate where one currency is linked to that of other countries
Fiscal policy
The policy of the government regarding taxation and government expenditure
Externalities
Costs or benefits that spill over to third parties external to a market transaction
Exchange rates
The price at which one currency can be exchanged for another
Balance of payments spending
More is exported than imported
Balance of payments equilibrium
A country is importing the same amount of goods as it is exporting
Budget surplus
Where government receipts exceed government spending in a financial year
Budget deficit
Where government spending exceeds government receipts in a financial year
Balance of payments
Exports minus imports. A record of all financial transactions
Positive multiplier effect
Positive multiplier effect is where an increase in consumer spending leads to a larger than proportionate change in the national income for positive results (profit)
Privatisation
Sale of government owned assets to the private sector
Public sector
Part of a state where either production, delivery or services are run by the government
RPI
A measure of the price level that excludes payments to services, mortgages and interest
Saving
Saving is a withdrawal from the circular flow. It is income not spent
The Euro
The currency of the eurozone
Negative multiplier effect
Negative multiplier effect is where a decrease in consumer spending leads to a larger than proportionate change in the national income for positive results (fall in profit)
National income
The value of all products and services produced in a country together with income from other countries
Monetary Policy Committee
A committee of economists and central bankers who meet monthly and decide whether or not to change the bank rate
Macro Economic Aims
The aims of macroeconomic policy is to gain high employment, price stability, economic growth and balance of payments equilibrium
Market failures
Where the market fails to produce what consumers requires at the lowest possible cost
Market system
The market system allocated goods by price
Mixed economy
An economic system where both the state and the private sector contribute to the economy
Monetary Policy
Controlling the macroeconomy via change in monetary variables such as the money supply or interest rates
