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defintions Macro Flashcards

1
Q

trade

A

exchange of goods and services

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2
Q

international trade

A

exchange of money for goods and services between or amongst countries

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3
Q

what is the theory of absolute advantage

A

states that a country will produce more quantities of both goods than the other

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4
Q

terms of trade

A

represents the ratio for which the two countries will trade the two goods

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5
Q

what is the theory of comparative advantage

A

the country with the least domestic opportunity cost ratio will have the comparative advantage in the production of that good

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6
Q

open economy

A

economy involved in trade with other economies

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7
Q

closed economy

A

economy that does not trade with other economies

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8
Q

what are injections

A

addition to the circular flow of income
-(I) investment
- (G) gov spending
- (X) exports

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9
Q

what are leakages

A

withdrawals from the circular flow of income
-(T) taxes
-(S) saving
-(M) imports

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10
Q

aggregate demand

A

the sum total of all demand for all goods and services in the economy

C+I+G+(X-M)

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11
Q

what is the real income effect

A

as the price level falls, the real value of income rises and consumers can buy more of what they want or need

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12
Q

what is the balance of trade effect (AD)

A

a fall in the relative price level of country x could make foreign produced goods and services more expensive, causing a rise in exports and fall in imports

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13
Q

what is aggregate supply

A

the sum total of all supply for all goods and services in the economy

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14
Q

unemployment

A

the state of being willing and able to work but not having a job

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15
Q

claimant count

A

based on those claiming unemployment benefits

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16
Q

labour force

A

based on a survey of people who are actively seeking job

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17
Q

level of unemployment

A

the number of workers who are unemployed

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18
Q

unemployment rate

A

unemployed workers as a percentage of the labour fore

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19
Q

frictional unemployment

A

temporary unemployment that arises when workers are in-between jobs

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20
Q

structural unemployment

A

caused as a result of the changing structure of the economy

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21
Q

cyclical unemployment

A

results due to a lack of demand

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22
Q

inflation

A

sustained increase in the general price level and a fall in the value of money

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23
Q

deflation

A

sustained decrease in the general price level and an increase in the value of money

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24
Q

disinflation

A

a fall in the inflation rate

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25
menu costs
cost to firms of having to change prices due to inflation
26
shoe leather costs
cost of moving money around in search of the highest interest rate
27
inflationary noise
confusion over relative prices caused by inflation
28
nominal(money) value
data values raw not adjusted for inflation
29
real data
data adjusted for inflation
30
fiscal policy
the use of taxation and government spending to influence aggregate demand
31
budget surplus
government revenue exceeding government spending
32
budget deficit
government expenditure exceeding government revenue
33
automatic stabilisers (fiscal)
changes in government spending and taxation that occur to reduce fluctuations in aggregate demand without any alteration in government
34
automatic stabilisers (fiscal)
changes in government spending and taxation that occur to reduce fluctuations in aggregate demand without any alteration in government policy
35
cyclical budget deficit
a budget deficit caused by a decline in economic activity
36
structural budget deficit
caused by an imbalance between government and taxation.
37
indirect tax
tax on goods and services
38
sin taxes
taxes on products considered harmful to consumers
39
specific taxes
taxes that are charged as a set amount per unit
40
direct tax
taxes on income and wealth
41
tax avoidance
legal bending of the rules of the tax system to pay less tax
42
tax evasion
the illegal non-payment or underpayment of a tax
43
marginal rate of taxation
proportion of extra income taken in tax
44
exhaustive gov spending
government spending which makes use of resources
45
non-exhaustive government spending
government spending which allows others to decide how the resources are used
46
monetary policy
the use of interest rates, the money supply, credit regulations to influence aggregate demand
47
monetary policy
the use of interest rates, the money supply, credit regulations to influence aggregate demand
48
central bank
government owned bank that provides services to the government and commercial banks
49
commercial banks
banks which aim to make a profit by providing a range of services to firms and households
50
credit regulation
rules affecting bank lending
51
interest rates
the price for borrowing money and the reward for saving
52
minimum reserve requirement (monetary)
least amount of money in any form that should be kept in a bank at all times
53
supply side policy
government tool designed to increase aggregate supply
54
protectionism
protecting domestic producers from foreign competition
55
tariff
tax imposed on imports and sometimes exports
56
Quota
limit on imports
57
export subsidies
subsidies given to exporters to cover the difference between internal market prices and world market prices
58
embargoes
a complete ban either on the imports of a particular product or on trade with a particular country
59
excessive administrative burdens (red tape)
governments seek to discourage imports by requiring importers to fil out lengthy forms that are time consuming
60
balance of payments accounts
a record of a countries economic transactions with the rest of the world over a year
61
primary income (BoP)
income in the form of profit, interest, and dividends earner from direct investment abroad
62
secondary income (BoP)
income generated from locals working abroad; foreign aid, loans, transfers
63
Exchange rates
the value of a unit of one country's currency in terms of another country's currency
64
floating exchange rate
an exchange rate that is determined by the market forces of demand and supply
65
appreciation (exchange rate)
an increase in the international price of a currency caused by market forces
66
depreciation
a decrease in the international price of a currency caused by market forces

AS Econ (3 decks)

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