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Macro Definitions F-W > Definitions I->R(eg) > Flashcards

Definitions I->R(eg) Flashcards

(64 cards)

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1
Q

What is involuntary unemployment?

A

Occurs when workers are willing to work at current market wage rates but there are no jobs available.

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2
Q

Who are Keynesian economists?

A

Followers of the economist John Maynard Keynes, who believe that governments should manage the economy, particularly through fiscal policy.

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3
Q

What is the Labour Force Survey?

A

A quarterly sample survey of households in the UK providing information on the UK labour market.

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4
Q

Define less developed countries.

A

Countries considered behind in terms of their economy, human capital, infrastructure, and industrial base.

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5
Q

What are liabilities?

A

Things which people or organisations owe.

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6
Q

What does the life-cycle theory of consumption explain?

A

Consumption and saving in terms of how people expect their incomes to change over their life cycles.

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7
Q

What is liquidity?

A

Measures the ease with which an asset can be converted into cash without loss of value.

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8
Q

What is the liquidity ratio?

A

The ratio of a bank’s cash and other liquid assets to its deposits.

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9
Q

What is long-run aggregate supply?

A

The real output that can be supplied when the economy is on its production possibility frontier.

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10
Q

Define long-run economic growth.

A

An increase in the economy’s potential level of real output and an outward movement of the economy’s production possibility frontier.

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11
Q

What is a macroeconomic indicator?

A

Provides information from recent economic performance for judging the success or failure of a particular type of government policy.

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12
Q

What is the marginal propensity to consume?

A

The fraction of any increase in income which people plan to spend on the consumption of domestically produced goods and services.

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13
Q

What is the marginal propensity to save?

A

The fraction of any increase in income which people plan to save rather than spend.

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14
Q

What are market-based supply-side policies?

A

Non-interventionist supply-side policies that free up markets, promote competition and greater efficiency.

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15
Q

What is marketisation?

A

Shifting provision of goods or services from the non-market sector to the market sector.

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16
Q

What is a maturity date?

A

The date on which the issuer of a dated security pays the face value of the security to the security’s owner.

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17
Q

What does monetarism focus on?

A

Narrow monetarism centres on increases in the money supply as the prime cause of inflation.

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18
Q

Who are monetarists?

A

Economists who argue that a prior increase in the money supply is the cause of inflation.

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19
Q

What is monetary policy?

A

The use by the government and its agent, the Bank of England, of interest rates and other monetary instruments to achieve policy objectives.

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20
Q

What is the Monetary Policy Committee?

A

The part of the Bank of England which implements UK monetary policy.

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21
Q

What are monetary policy instruments?

A

Tools such as Bank Rate used to achieve monetary policy objectives.

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22
Q

What is money primarily used for?

A

A medium of exchange or means of payment.

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23
Q

What do money markets provide?

A

A means for lenders and borrowers to satisfy their short-term financial needs.

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24
Q

Define money supply.

A

The stock of financial assets which function as money.

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25
What is moral hazard?
The tendency of individuals and firms, once protected against some contingency, to behave so as to make that contingency more likely.
26
Define more developed countries.
Countries with a high degree of economic development and high average income per head.
27
What are multinational corporations?
Enterprises operating in several countries but with their headquarters in one country.
28
What is the multiplier effect?
The relationship between a change in aggregate demand and the resulting generally larger change in national income.
29
What is narrow money?
The part of the stock of money made up of cash and liquid bank deposits.
30
Define national capital stock.
The stock of capital goods in the economy that has accumulated over time.
31
What is national debt?
The stock of all past government borrowing that has not been paid back.
32
What is national income?
The flow of new output produced by the economy in a particular period.
33
What is national product?
The flow of new output produced by different industries in a particular period.
34
Define national wealth.
The stock of all goods that exist at a point in time that have value in the economy.
35
What is the natural rate of unemployment?
The rate of unemployment when the aggregate labour market is in equilibrium.
36
What is a negative output gap?
The level of actual real output in the economy is lower than the trend output level.
37
What is nominal GDP?
GDP measured at the current market prices, without removing the effects of inflation.
38
What is normal capacity level of output?
The level of output at which the full production potential of the economy is being used.
39
What is the Office for Budget Responsibility?
An advisory public body that provides independent economic forecasts and analysis of the public finances.
40
Define open economy.
An economy open to international trade.
41
What do output gaps show?
The level of actual real output in the economy either higher or lower than the trend output level.
42
What does the Phillips curve illustrate?
The relationship between the rate of inflation and the rate of unemployment.
43
What is policy conflict?
Occurs when two policy objectives cannot both be achieved at the same time.
44
What is a policy objective?
A target or goal that policy-makers aim to 'hit'.
45
What is portfolio investment?
The purchase of one country's securities by the residents or financial institutions of another country.
46
What is a positive output gap?
The level of actual real output in the economy is greater than the trend output level.
47
What is a price index?
An index number showing the extent to which a price, or a 'basket' of prices, has changed over time.
48
What is the principle of taxation?
A criterion used for judging whether a tax is good or bad.
49
What does privatisation involve?
Shifting ownership of state-owned assets to the private sector.
50
Define profitability.
The state or condition of yielding a financial profit or gain.
51
Who are pro-free-market economists?
Opponents of Keynesian economists who prefer the operation of free markets.
52
What is proportional taxation?
When the proportion of income paid in tax stays the same as income increases.
53
What is the Prudential Regulation Authority?
The part of the Bank of England responsible for the microprudential regulation and supervision of financial institutions.
54
What are purchasing power parity (PPP) exchange rates?
Rates of currency conversion that equalise the purchasing power of different currencies.
55
What is quantitative easing?
When the Bank of England buys assets with money that it has created electronically.
56
What does the quantity theory of money state?
Inflation is caused by a persistent increase in the supply of money.
57
What are quotas?
Physical limits on the quantities of imported goods allowed into a country.
58
What is the rate of interest?
The reward for lending savings and the cost of borrowing.
59
What is real GDP?
A measure of all goods and services produced in an economy, adjusted for price changes or inflation.
60
What are real wages?
The purchasing power of the nominal wage.
61
What is real-wage unemployment?
Unemployment caused by real wages being stuck above the equilibrium market-clearing real wage.
62
What defines a recession?
Six months or more of negative economic growth or declining real national output.
63
What are reflationary policies?
Policies that increase aggregate demand with the intention of increasing real output and employment.
64
What is regressive taxation?
When the proportion of income paid in tax falls as income increases.

Macro Definitions F-W (3 decks)

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