Definitions Required

Question 1

Actual Economic growth

Answer 1

An increase in real GDP.

Question 2

Aggregate Demand

Answer 2

Total spending on domestic output at a given time.

Question 3

Aggregate Supply

Answer 3

The total value of output all producers are willing and able to supply at a given time and price level.

Question 4

Automatic Stabilisers

Answer 4

Forms of government spending and taxation that dampen down the affects of fluctuations without government policy changes.

Question 5

Balance of Payments

Answer 5

A record of a countries trade and investment with other countries.

Question 6

Capacity Utilisation

Answer 6

Measures how much of an economies productive potential is being used.

Question 7

Claimant Count

Answer 7

The number of people claiming unemployment benefits.

Question 8

Circular Flow of Income

Answer 8

The flow of products/services between firms/producers and households/consumers.

Question 9

Corporation Tax

Answer 9

A tax levied on a firms profits.

Question 10

Cost Push Inflation

Answer 10

Increases in the average price levels as a result of increases in the cost of production.

Question 11

Current Account Balance

Answer 11

A records of a countries trade in goods, trade in services, income and transfers.

Question 12

Cyclical Unemployment

Answer 12

Unemployment resulting from the lack of aggregate demand.

Question 13

Demand Pull Inflation

Answer 13

Increases in the average price level resulting from excessive increases in aggregate demand.

Question 14

Deregulation

Answer 14

The removal of laws and regulation that restrict competition.

Question 15

Direct Taxes

Answer 15

Taxes on income and wealth of the people and firms.

Question 16

Disposable Income

Answer 16

Income after the deduction of direct taxes and the addition of state benefits.

Question 17

Economic Growth

Answer 17

The growth in the value of output in the economy.

Question 18

Exchange Rate

Answer 18

The price of one countries currency in terms of another.

Question 19

Expansionary Monetary Policy

Answer 19

Changes in the money supply (increase), rate of interest (cut) and exchange rate (lower) which are designed to stimulate aggregate demand.

Question 20

Fiscal Drag

Answer 20

The reduction in disposable income that occurs when tax bands are not in line with inflation.

Question 21

Fiscal Policy

Answer 21

A governments policy in regards to taxation, public spending. It can be loose/expansionary or tight/deflationary.

Question 22

Frictional Unemployment

Answer 22

Unemployment arising when people are between jobs.

Question 23

GDP

Answer 23

The total value of goods and services produced by a country based in an economy.

Question 24

Hot Money Flows

Answer 24

Flows of short term finance that moves around the world as a result of changing interest rates and exchange rates.

Question 25

Hyperinflation

Answer 25

A very high rate of inflation which causes huge economic problems.

Question 26

Hysteresis

Answer 26

Unemployment generating unemployment by reducing the confidence and level of skills of the unemployed.

Question 27

Indirect Taxes

Answer 27

Taxes on the consumption of goods/services.

Question 28

Injections

Answer 28

Spending domestic output from inside the circular flow, government spending investment and exports.

Question 29

Marginal Propensity to Consume

Answer 29

The proportion of any addition income which is spent rather than saved.

Question 30

Marginal Propensity to Save

Answer 30

The proportion of any additional income which is saved rather than spent.

Question 31

Monetary Policy

Answer 31

Changes in the money supply, rate of interest and exchange rate.

Question 32

Multiplier

Answer 32

An increase in the levels of injections in the circular flow of which increases aggregate demand.

Question 33

Rate of Unemployment

Answer 33

The number of people who are willing, able and registered to work, but cannot find work despite an active search expressed as a percentage.

Question 34

Rate of Inflation

Answer 34

A steady and continuous rise in average price levels expressed as a percentage.

Question 35

Real GDP

Answer 35

GDP adjusted to inflation.

Question 36

Structural Unemployment

Answer 36

A mismatch in the demand for skills as a result int he changing industry pattern.

Question 37

Supply-Side Policies

Answer 37

Policies design to increase the economies long term economic growth.

Question 38

Tariff

Answer 38

A tax on imports

Question 39

Transfer Payments

Answer 39

Money transferred from one group to another in return for providing a good/service.

Question 40

Unemployment Trap

Answer 40

People who are better of staying on unemployment benefits rater then getting a job.

Question 41

Withdrawals

Answer 41

Parts of income which are not passes on in the circular flow of income, leakages, savings, tax and imports.

Question 42

Leakages

Answer 42

Taxation, Imports and Savings