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Macroeconomics > Booklet 3 > Flashcards

Booklet 3 Flashcards

1
Q

What is the name of inflation which economic agents are expecting and for which they have planned?

A

Anticipated Inflation

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2
Q

What is the term for when a change in one variable automatically leads to an opposing change in another?

A

Automatic Stabiliser

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3
Q

What is the name for a situation where the government’s spending for a given period equals its receipts?

A

Balanced Budget

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4
Q

What is the name for the interest rate set by the Bank of England which influences other interest rates across the UK economy?

A

Bank rate or Base rate

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5
Q

What is the term that describes a fall in the general-price level which is caused by falling costs and which acts as a boost to real incomes?

A

Benign deflation

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6
Q

What describes a situation where the government’s spending in a given period is greater that the government’s receipts, meaning the government will have to borrow?

A

Budget Deficit

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7
Q

What describes a situation where the government receives more in tax revenue than it spends?

A

Budget Surplus

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8
Q

What type of unemployment is cause by real wages being too high?

A

Classical or Real-Wage unemployment

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9
Q

What is the term describing a government policy designed to reduce aggregate demand (or the rate at which aggregate demand is increasing) usually to combat demand-pull inflation?

A

Contractionary Policy

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10
Q

What is the name for the rate of inflation excluding price changes from more volatile items such as food and fuel?

A

Core Inflation

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11
Q

What is the name for inflation caused by rising costs of production?

A

Cost-push Inflation

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12
Q

What is a macro-economic policy designed to work against the business cycle called?

A

Counter-cyclical policy

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13
Q

What is the name for a low but positive rate of inflation which means that prices are rising, but the increase is barely noticeable?

A

Creeping Inflation

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14
Q

What is it called when the currency outflows from a country’s current account exceed the currency inflows?

A

Current account deficit

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15
Q

What is it called when the currency inflows into a country’s current account exceed the currency inflows?

A

Current account surplus

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16
Q

What is unemployment caused by a lack of aggregate demand called?

A

Cyclical, Keynesian or demand-deficient unemployment

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17
Q

What term describes a sustained decrease in the general level of prices?

A

Deflation

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18
Q

What is inflation caused by an increase in aggregate demand called?

A

Demand-pull inflation

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19
Q

What is a tax on income such as wages/salaries or profit called?

A

Direct tax

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20
Q

What is a conscious decision by the government to change its fiscal policy called?

A

Discretionary fiscal policy

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21
Q

What is a fall in the rate of inflation called?

A

Disinflation

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22
Q

What is the name for people who are willing to work at the current wage rate- those in employment and those who are unemployed?

A

Economically Active

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23
Q

What is the name for people who are unwilling to work at the current wage rate or are unable to?

A

Economically Inactive

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24
Q

What is the term used to describe the value of one currency expressed in terms of another currency?

A

Exchange Rate

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25
Q

What is government policy designed to promote economic growth by increasing aggregate demand called?

A

Expansionary policy

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26
Q

What is the name for an unexpected event with origins outside of a country?

A

External Shock

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27
Q

What is the name of expansionary fiscal policy?

A

Fiscal Loosening

28
Q

What is macroeconomic policy based on the control of taxation and government spending called?

A

Fiscal Policy

29
Q

What is a contractionary fiscal policy called?

A

Fiscal Tightening

30
Q

What is the name for interest rates which do not change for the duration of a loan?

A

Fixed interest rates

31
Q

What are policies designed to increase the economy’s productive capacity by reducing government involvement called?

A

Free-market supply-side policies

32
Q

What is the kind of unemployment where workers who are currently between jobs due to the time taken to find a suitable vacancy called?

A

Frictional Unemployment

33
Q

What is it called when workers find it difficult to relocate?

A

Geographical immobility of labour

34
Q

What is the name for a very high rate of inflation, typically in excess of 100% per year?

A

Hyperinflation

35
Q

What is the name for a tax on expenditure, levied on goods and services?

A

Indirect Tax

36
Q

What is the name for a sustained increase in the general level of prices?

A

Inflation

37
Q

What is the reward for saving and the cost of borrowing?

A

Interest

38
Q

What is the return on savings or borrowing expressed as a percentage?

A

Interest Rate

39
Q

What is fairness between generations called?

A

Inter-generational equity

40
Q

What is an unexpected event with origins within a country called?

A

Internal Shock

41
Q

What are policies designed to increase the economy’s productive capacity through greater government intervention called?

A

Interventionist supply-side policies

42
Q

What is an increase in an economy’s real gross domestic product caused by an increase in productive capacity called?

A

Long-run economic growth

43
Q

What is a fall in the general price level caused by falling aggregate demand called?

A

Malign deflation

44
Q

What is a macroeconomic policy based on the control of interest rates, the money supply and exchange rates called?

A

Monetary policy

45
Q

What is the name for the stock of outstanding debt owed by a country’s government?

A

National debt

46
Q

What is the difficulty workers have in changing jobs due to a lack of transferrable skills called?

A

Occupational immobility of labour

47
Q

What is the name for macroeconomic policy designed to work in line with the business cycle?

A

Pro-cyclical policy

48
Q

What is the name for a tax that will take a higher proportion of high earner’s income?

A

Progressive tax

49
Q

What is the name for a tax that will take an equal proportion of everybody’s income?

A

Proportionate tax

50
Q

What is the name for real national output/income per person?

A

Real G.D.P per capita

51
Q

What is the name for a tax that will take a higher proportion of low earners’ income?

A

Regressive tax

52
Q

What is it called when workers are unemployed only at certain times of the year?

A

Seasonal unemployment

53
Q

What is an increase in an economy’s real gross domestic product caused by increased use of its productive capacity called?

A

Short-run economic growth

54
Q

What is unemployment cause by a change in the structure of the economy which means that there is no longer demand for a certain type of labour called?

A

Structural Unemployment

55
Q

What are policies designed to increase long run aggregate supply and increase the productive capacity called?

A

Supply-side policies

56
Q

What unemployment is often regarded as part of structural unemployment, caused by workers being replaced by machinery?

A

Technological unemployment

57
Q

What is it called when the value of a country’s imports exceeds the value of the country’s exports?

A

Trade deficit

58
Q

What is inflation which economic agents are not expecting and for which they have not planned called?

A

Unanticipated inflation

59
Q

What is it called when a worker has a job but is working fewer hours than they would like - e.g. someone who wants a full time job but takes a part-time job?

A

Underemployment

60
Q

What is the number of people who are actively seeking employment at a prevailing wage rate but are unable to find it called?

A

Unemployment

61
Q

What are interest rates that change, usually in response to changes in Bank Rate, such as some mortgages and most savings accounts, called?

A

Variable interest rates

62
Q

What is a scenario when rising inflation leads workers to demand increased pay to maintain their standard of living, which in turn increases firms’ costs leading to further price rises and more inflation called?

A

Wage-price spiral

63
Q

What are the two measures of unemployment used in the UK?

A

Claimant Count
LFS - Labour Force Survey

64
Q

Give four sources of demand-pull inflation.

A

Increasing income/consumer confidence
Falling interest rates
Increased government spending
Increased Exports

65
Q

Give four sources of cost-push inflation.

A

Rising Wages
Increasing Indirect taxes
Rising energy/fuel costs
Rising raw material prices

66
Q

Give three possible benefits to inflation.

A

Allowing some inflation means that relative prices can adjust
Difficulties in measuring inflation may mean that targeting zero could mean deflation is actually happening
Inflation may mean that firms can overcome the problem of prices (especially wages) being sticky-downwards.

Macroeconomics (6 decks)

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