definitions theme 2

Question 1

what is actual growth

Answer 1

economic growth measured by changes in real GDP

Question 2

what’re animal spirits

Answer 2

the level of confidence of business owners

Question 3

what is balance of payments

Answer 3

a record of all financial dealings over a period of time between economic agents of one country and another

Question 4

what is budget

Answer 4

where the government lays out their spending and taxation plans

Question 5

what is budget deficit/surplus

Answer 5

when the government spends more money than it receives

when the government receives more money than it spends

Question 6

what is the circular flow

Answer 6

a model of the economy which shows the flow of goods and services, the factors of production and money around the economy

Question 7

what is the claimant count

Answer 7

a measure of unemployment; the # of people receiving benefits for being unemployed

Question 8

what is the CPI

Answer 8

official measure used to calculate the rate of inflation, using a weighted basket of goods

Question 9

what is consumption

Answer 9

consumer spending on goods and services

Question 10

what is the current account

Answer 10

a record of the payments for the purchase and sale of goods and services, as well as income and transfers

Question 11

what is the current account deficit/surplus

Answer 11

when more money leaves the country than enters; the current account is negative

when more money enters the country than leaves; the current account is positive

Question 12

what is cyclical unemployment

Answer 12

unemployment caused by a lack of AD (workers are laid off to cut costs)

Question 13

what is deflation

Answer 13

a persistent fall in prices of goods and services

Question 14

what is a deflationary and expansionary policy

Answer 14

deflationary: fiscal or monetary policy aimed to reduce AD

expansionary: fiscal or monetary policy aimed to increase AD

Question 15

what is depreciation

Answer 15

the reduction in the value over time

Question 16

what is a direct tax

Answer 16

taxes paid straight to the government by the individual taxpayer

Question 17

what is disinflation

Answer 17

a reduction in the rate of inflation

Question 18

what is economic growth

Answer 18

an increase in the long run productive potential in the economy; an increase in the amount of goods and services which are produced, measured by an increase in real GDP

Question 19

what is fiscal policy

Answer 19

the use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance

Question 20

what is frictional unemployment

Answer 20

unemployment caused when people move between jobs and enter the job market

Question 21

what is GDP

Answer 21

the value of goods/services produced in a country over a given period of time

Question 22

what is gdp per capita

Answer 22

total gdp / population

Question 23

what is gross investment

Answer 23

investment both to replace old machinery that has depreciated and to create/buy new ones

Question 24

what is GNI

Answer 24

gross national income is the value of goods/services produced by a country over a period of time + net overseas interest payments and dividends

Question 25

what is GNP

Answer 25

gross national product is the value of goods and services produced by citizens of a country, living in the country or not

Question 26

what is an indirect tax

Answer 26

tax where the person charged with paying the money to the government is able to pass on the cost to someone else

Question 27

what is inflation

Answer 27

the general rise in the GPL of goods and services that erodes the purchasing power of money

Question 28

what’re interventionist supply side policies

Answer 28

policies designed to correct market failure, where the government intervenes in the market

Question 29

what is investment

Answer 29

spending by businesses on capital goods, leading to the creation of real/consumer goods

Question 30

what is the long run

Answer 30

when all factors are variable

Question 31

what’re market based supply side policies

Answer 31

policies designed to remove anything which prevents the free market system from working efficiently

Question 32

what is monetary policy

Answer 32

attempts of the CB/regulatory authority to control the AD level by altering base interest rates or the amount of money in the economy

Question 33

what is the Monetary Policy Committee (MPC)

Answer 33

economists who meet monthly to set the bank rate as well as other monetary instruments

Question 34

what is national expenditure

Answer 34

the value of spending by households on goods/services

Question 35

what is national income

Answer 35

the value of income paid by firms to households in return for land, labour capital and enterprise

Question 36

what is national output

Answer 36

the value of the flow of goods and services from firms to households

Question 37

what is net investment

Answer 37

gross investment - depreciation

Question 38

what is nominal GDP

Answer 38

GDP that doesn’t take inflation into account; at current prices

Question 39

what is an output gap

Answer 39

difference between the long term trend rate of growth and actual growth

Question 40

what is PPP

Answer 40

Purchasing Power Parity measures the exchange rate of one country to another, that compared the costs of living in different countries through comparing a typical basket of goods

Question 41

what is QE

Answer 41

when the central bank buys assets in exchange for money in an attempt to increase the money supply

Question 42

what is real wage unemployment

Answer 42

unemployment caused when wages are set above the equilibrium wage rate

Question 43

what is seasonal unemployment

Answer 43

unemployment caused when an industry only operates during certain times of the year

Question 44

what is the short run

Answer 44

when at least 1 factor of production is fixed

Question 45

what is structural unemployment

Answer 45

unemployment caused by the long-term decline of an industry

Question 46

what’re supply side policies

Answer 46

government policies aimed at increasing the productive potential of the economy and shifting LRAS to the right

Question 47

what is underemployment

Answer 47

those working part time, 0 hour contracts or on government training schemes but would rather work full time or those employed in areas under their skill level

Question 48

what is value/volume of GDP

Answer 48

value: nominal values of GDP; at current prices volume: real values of GDP; the size of the basket of goods

Question 49

what is unemployment

Answer 49

those willing and able to work but cannot find work, and have actively sought work for the last 4 weeks

Question 50

what is wealth

Answer 50

a stock of assets