DEFINITIONS

Question 1

GDP

Answer 1

The value of all goods and services produced in a country in one year.

Question 2

Nominal value

Answer 2

A value expressed in current prices.

Question 3

Real value

Answer 3

A value which for which the effects of inflation have been corrected .

Question 4

GDP per capita

Answer 4

The GDP / national income of a country divided by the total population.

Question 5

Output gap

Answer 5

The difference between actual and potential economic growth.

Question 6

Circular flow of income

Answer 6

The flow of money around an economy, through the government, households, and firms. There are injections into it (e.g. investment, savings, and exports), and withdrawals out of it (e.g. taxes and imports).

Question 7

Purchasing Power Parities

Answer 7

The rate at which one country’s currency would have to be converted into the currency of a different country, to buy the same amount of goods and services.

Question 8

Economic growth

Answer 8

The rate of increase of real GDP.

Question 9

Recession

Answer 9

When real GDP falls (i.e. growth is negative) for two consecutive quarters.

Question 10

Potential economic growth

Answer 10

How much more the economy could produce if we used all our available factors of production than we could previously, usually the previous year.

Question 11

Inflation

Answer 11

A sustained increase in the general price level.

Question 12

Wealth

Answer 12

The sum of all the assets in an economy.

Question 13

Deflation

Answer 13

A fall in the general price level.

Question 14

Disinflation

Answer 14

When the general price level is falling, but at a slower rate than previously.

Question 15

Unemployment

Answer 15

The number of people who are available for work and are without a paid job.

Question 16

Claimant Count

Answer 16

The number of people claiming unemployment related benefits (in a year?)

Question 17

Working population

Answer 17

The proportion of the population that are either in work or seeking work.

Question 18

The balance of payments

Answer 18

A record of financial transactions made between consumers, businesses and the government in one country with other countries.

Question 19

AD

Answer 19

The total level of spending within an economy at any given PL.

Question 20

Multiplier

Answer 20

The extent to which an initial injection or withdrawal is magnified to bring about a greater change in national income.

Question 21

MPC

Answer 21

The proportion of income consumed given an increase in income.

Question 22

AS

Answer 22

The total level of output supplied within an economy at any given PL.

Question 23

Consumption

Answer 23

Consumer spending on goods / services

Question 24

Investment

Answer 24

The addition to the capital stock of the economy by firms.

Question 25

Net exports

Answer 25

The difference between a country's exports and imports.

Question 26

Macroeconomic Equilibrium

Answer 26

The point at which AD intersects AS.

Question 27

Demand side policies

Answer 27

Instruments at the disposal of the government to help it influence AD and achieve its main macroeconomic objectives.

Question 28

Fiscal policy

Answer 28

The use of government spending and / or taxation to manage the level of AD.

Question 29

Direct tax

Answer 29

Tax levied on an individual / organisation

Question 30

Indirect tax

Answer 30

Tax on a good / service

Question 31

Monetary policy

Answer 31

The use of interest rates and the money supply to influence AD.

Question 32

Interest rates ???

Answer 32

The price of borrowing. ???

Question 33

Gross National Income

Answer 33

GDP + net investment income (IPDs)

Question 34

Current account

Answer 34

Sum of trade in goods, trade in services, net investment income and net current transfers.

Question 35

Capital account

Answer 35

Record of the movement of assets through migration.

Question 36

Financial account

Answer 36

Record of transactions in assets. Sum of net foreign direct investment, net foreign portfolio investment, net financial derivatives, and net reserve assets.

Question 37

Progressive tax

Answer 37

A tax where the proportion of income paid in tax rises as the income of the taxpayer rises, e.g. income tax.

Question 38

Regressive tax

Answer 38

A tax where the proportion of income paid in tax falls as the income of the taxpayer rises. E.g. indirect taxes such as duty on alcohol.

Question 39

Supply side policies

Answer 39

Policies that attempt to influence an economy's potential output by increasing the quantity or quality of a factor of production.

Question 40

Gross National Income

Answer 40

GDP + net investment income (IPDs)

Question 41

Current account

Answer 41

Sum of trade in goods, trade in services, net investment income and net current transfers.

Question 42

Capital account

Answer 42

Record of the movement of assets through migration.

Question 43

Financial account

Answer 43

Record of transactions in assets. Sum of net foreign direct investment, net foreign portfolio investment, net financial derivatives, and net reserve assets.

Question 44

Regressive tax

Answer 44

A tax where the proportion of income paid in tax falls as the income of the taxpayer rises. E.g. indirect taxes such as duty on alcohol.

Question 45

Supply side policies

Answer 45

Policies that attempt to influence an economy's potential output by increasing the quantity or quality of a factor of production.

Question 46

Progressive tax

Answer 46

A tax where the proportion of income paid in tax rises as the income of the taxpayer rises, e.g. income tax.

Question 47

Budget Deficit

Answer 47

The amount by which government expenditure exceeds taxation in a year.

Question 48

Underemployment

Answer 48

The number of workers who are willing to supply more hours of work than their employers are willing to offers.

Question 49

Net investment income ???

Answer 49

The net interest, profits, and dividends we receive each year. ???

Question 50

Current transfers.

Answer 50

Movements of money that don't represent any economic transaction.