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Economics B : Theme 2 > 2.5.1 - 2.5.4 > Flashcards

2.5.1 - 2.5.4 Flashcards

1
Q

Economic cycle

A

Diagram to show economic growth

Boom, recession, slump, recovery

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2
Q

Boom

A 
Optimum levels of spending and growth
---------------------------------------------------------------------------
Unstable growth 
Employment high
Pay increases for workers
Higher spending
Unemployment lower
Prices rise (demand-pull inflation)
BofE increase interest rates to encourage saving and reduce spending (may slow growth rate)
Abrupt end could be a recession (2007)
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3
Q

Soft landing

A

Bank of England increase interest rates to reduce growth

If this works then it is known as a soft landing

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4
Q

Recession

Two or more successive quarters of falling GDP

A

Phase of economic cycle where GDP is falling
Linked to rising unemployment and low business confidence
—————————————————————————
Customers demand less
Businesses supply less
Fewer jobs
Less investment
Can lead to downward spiral

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5
Q

Stagflation

A

Combination of falling GDP and rising prices at comfortable rates

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6
Q

Social capital

A

Capital assets that are publicly owned

Eg. Schools, roads

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7
Q

Leading indicators

A

Falling confidence
Less investment
Share prices fall
House prices fall

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8
Q

Lagging indicators

A

Unemployment
Businesses adjust to falling customer spending

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9
Q

John Maynard Keynes

A

Animal spirits
State of mind of producers/consumers
Related to mood of customers

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10
Q

Hyman Minsky

A

People realise that they are unable to pay debts, bank loans, mortgages, etc.

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11
Q

Recovery

A

Technological breakthrough
Successful government action
Shift in consumer confidence

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12
Q

Dividends

A

Income received by the owners of businesses or shares

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13
Q

Leakages

A

Savings
Imports
Taxation

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14
Q

Injections

A

Income coming from other sources than the main injections
(I, G, X)
—————————————————————————
Investment
Exports
Government spending

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15
Q

Aggregate demand

AD

A

Measures total demand from all sources of the economy

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16
Q

Capital growth

A

Productive assets, acquired by investment, which are expected to contribute in future

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17
Q

Aggregate supply curve

A

Diagram showing total quantities of output in the economy at different price levels

18
Q

Supply constraints

A

Demand for scarce resources increases which forces prices upwards

19
Q

Aggregate Supply

AS

A

Classical:
People will work for any wage if they want to work, Employment at 96%
(Looks like -I)

Keynesian:
Wages are “sticky” and do not fall below a certain point
People will not work for any wage
(Looks like -‘)

Philips:
As demand increases, jobs increase
Jobs increase, workers demand higher wages
As economy reaches full employment, workers demand more wages
(Include intermediate on graph)

20
Q

Inflation

A

A rise in the general level of prices and fall in the purchasing power of money
Target is 2%

21
Q

Deflation

A

When the rate of inflation becomes negative

22
Q

Index numbers

A

Take data for a period of time every year and the index gives the percentage change from the base year

23
Q

Weights

A

Allow us to adjust raw data to allow for the relative importance of items such as those items bought frequently in the case of a price index

24
Q

Consumer price index

CPI

A

The main UK measures of inflation

Excludes mortgage payments and tax changes

25
Q

Retail Price Index

RPI

A

Takes mortgage payments and tax changes into account

26
Q

Real Values

A

Have the effect of inflation/deflation removed so that they show actual quantity changes
Using current prices without modifying the inflation, gives us nominal values

27
Q

Cost Push

A

Prices increase

28
Q

Demand Pull

A

Demand rises above maximum output

29
Q

Employment

A

Being economically active, normally in a paid role (self-employment included)

30
Q

Unemployment

A

Someone of working age, available to work, but with no job

31
Q

Underemployment

A

When people who want full-time employment can only find part-time
Or
Skilled and qualified people can find unskilled work

32
Q

Claimant count

A

Measures unemployment by counting everyone who claims Job Seekers Allowance

33
Q

Structural Unemployment

A

When demand for a product is falling because of changing customer preferences or competition from imports or new products

34
Q

Technological unemployment

A

When labour saving equipment and other new techniques reduce the need for labour

35
Q

Geographical mobility

A

The ability for workers to move from one area to another

36
Q

Occupational mobility

A

The ability to move from one type of work to another

37
Q

Seasonal unemployment

A

Varies through the year

38
Q

Frictional unemployment

A

When people have left one job and take a short time to find the next one

39
Q

Labour Force Survey

LFS

A

Samples population

Could be biased

40
Q

International Labour Organisation

ILO

A

Used when international comparisons made

Economics B : Theme 2 (7 decks)

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