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AS Econ > defintions Macro > Flashcards

defintions Macro Flashcards

1
Q

trade

A

exchange of goods and services

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2
Q

international trade

A

exchange of money for goods and services between or amongst countries

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3
Q

what is the theory of absolute advantage

A

states that a country will produce more quantities of both goods than the other

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4
Q

terms of trade

A

represents the ratio for which the two countries will trade the two goods

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5
Q

what is the theory of comparative advantage

A

the country with the least domestic opportunity cost ratio will have the comparative advantage in the production of that good

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6
Q

open economy

A

economy involved in trade with other economies

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7
Q

closed economy

A

economy that does not trade with other economies

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8
Q

what are injections

A

addition to the circular flow of income
-(I) investment
- (G) gov spending
- (X) exports

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9
Q

what are leakages

A

withdrawals from the circular flow of income
-(T) taxes
-(S) saving
-(M) imports

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10
Q

aggregate demand

A

the sum total of all demand for all goods and services in the economy

C+I+G+(X-M)

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11
Q

what is the real income effect

A

as the price level falls, the real value of income rises and consumers can buy more of what they want or need

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12
Q

what is the balance of trade effect (AD)

A

a fall in the relative price level of country x could make foreign produced goods and services more expensive, causing a rise in exports and fall in imports

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13
Q

what is aggregate supply

A

the sum total of all supply for all goods and services in the economy

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14
Q

unemployment

A

the state of being willing and able to work but not having a job

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15
Q

claimant count

A

based on those claiming unemployment benefits

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16
Q

labour force

A

based on a survey of people who are actively seeking job

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17
Q

level of unemployment

A

the number of workers who are unemployed

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18
Q

unemployment rate

A

unemployed workers as a percentage of the labour fore

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19
Q

frictional unemployment

A

temporary unemployment that arises when workers are in-between jobs

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20
Q

structural unemployment

A

caused as a result of the changing structure of the economy

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21
Q

cyclical unemployment

A

results due to a lack of demand

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22
Q

inflation

A

sustained increase in the general price level and a fall in the value of money

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23
Q

deflation

A

sustained decrease in the general price level and an increase in the value of money

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24
Q

disinflation

A

a fall in the inflation rate

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25
Q

menu costs

A

cost to firms of having to change prices due to inflation

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26
Q

shoe leather costs

A

cost of moving money around in search of the highest interest rate

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27
Q

inflationary noise

A

confusion over relative prices caused by inflation

28
Q

nominal(money) value

A

data values raw not adjusted for inflation

29
Q

real data

A

data adjusted for inflation

30
Q

fiscal policy

A

the use of taxation and government spending to influence aggregate demand

31
Q

budget surplus

A

government revenue exceeding government spending

32
Q

budget deficit

A

government expenditure exceeding government revenue

33
Q

automatic stabilisers (fiscal)

A

changes in government spending and taxation that occur to reduce fluctuations in aggregate demand without any alteration in government

34
Q

automatic stabilisers (fiscal)

A

changes in government spending and taxation that occur to reduce fluctuations in aggregate demand without any alteration in government policy

35
Q

cyclical budget deficit

A

a budget deficit caused by a decline in economic activity

36
Q

structural budget deficit

A

caused by an imbalance between government and taxation.

37
Q

indirect tax

A

tax on goods and services

38
Q

sin taxes

A

taxes on products considered harmful to consumers

39
Q

specific taxes

A

taxes that are charged as a set amount per unit

40
Q

direct tax

A

taxes on income and wealth

41
Q

tax avoidance

A

legal bending of the rules of the tax system to pay less tax

42
Q

tax evasion

A

the illegal non-payment or underpayment of a tax

43
Q

marginal rate of taxation

A

proportion of extra income taken in tax

44
Q

exhaustive gov spending

A

government spending which makes use of resources

45
Q

non-exhaustive government spending

A

government spending which allows others to decide how the resources are used

46
Q

monetary policy

A

the use of interest rates, the money supply, credit regulations to influence aggregate demand

47
Q

monetary policy

A

the use of interest rates, the money supply, credit regulations to influence aggregate demand

48
Q

central bank

A

government owned bank that provides services to the government and commercial banks

49
Q

commercial banks

A

banks which aim to make a profit by providing a range of services to firms and households

50
Q

credit regulation

A

rules affecting bank lending

51
Q

interest rates

A

the price for borrowing money and the reward for saving

52
Q

minimum reserve requirement (monetary)

A

least amount of money in any form that should be kept in a bank at all times

53
Q

supply side policy

A

government tool designed to increase aggregate supply

54
Q

protectionism

A

protecting domestic producers from foreign competition

55
Q

tariff

A

tax imposed on imports and sometimes exports

56
Q

Quota

A

limit on imports

57
Q

export subsidies

A

subsidies given to exporters to cover the difference between internal market prices and world market prices

58
Q

embargoes

A

a complete ban either on the imports of a particular product or on trade with a particular country

59
Q

excessive administrative burdens (red tape)

A

governments seek to discourage imports by requiring importers to fil out lengthy forms that are time consuming

60
Q

balance of payments accounts

A

a record of a countries economic transactions with the rest of the world over a year

61
Q

primary income (BoP)

A

income in the form of profit, interest, and dividends earner from direct investment abroad

62
Q

secondary income (BoP)

A

income generated from locals working abroad; foreign aid, loans, transfers

63
Q

Exchange rates

A

the value of a unit of one country’s currency in terms of another country’s currency

64
Q

floating exchange rate

A

an exchange rate that is determined by the market forces of demand and supply

65
Q

appreciation (exchange rate)

A

an increase in the international price of a currency caused by market forces

66
Q

depreciation

A

a decrease in the international price of a currency caused by market forces

AS Econ (3 decks)

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