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Economics > Econ2 > Flashcards

Econ2 Flashcards

0
Q

AD

A

The total planned expenditure in the economy

- C+I+G+(X-M)

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1
Q

Trade Gap

A

The size of a trade deficit

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2
Q

AS

A

The total value of goods and services supplied in the economy

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3
Q

Economic Growth

A

The capacity of the economy to produce more goods and services overtime

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4
Q

Leakage

A

When money isn’t passed on the circular flow and so therefore has the effect of reducing national income

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5
Q

Injection

A

Money that originates outside the circular flow and so therefore increases national income

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6
Q

Investment

A

-When firms spend on buildings/machinery and improve skills of labour force/ increase productivity

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7
Q

What happens/what measures in a +ve Output Gap

A
  • Actual growth is above trend meaning economy is growing faster and incomes are increasing
  • prices rise and there is inflationary pressure
  • AD needs to fall in order to repair this
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8
Q

Full Employment

A

Where everyone in search of a job has one

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9
Q

Accelerator Effect

A

-The relationship between the change in investment against the national income rate of change

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10
Q

Multiplier Effect

A

The idea that an

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11
Q

Monetary Policy

A

Controlling the macroeconomy by changing variables such as the interest rates or money supply

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12
Q

Fiscal Policy

A

Policy government implements that affects taxation and govt expenditure

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13
Q

Instrument

A

The techniques used to achieve policy objectives

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14
Q

Inflation/Deflation

A

The persistent rise/fall in the level of prices

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15
Q

Structural Unemployment

A

Unemployment caused by a change in demand/supply side.

More long term

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16
Q

Frictional Unemployment

A

People temporarily unemployed as they explore the job market

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17
Q

Cost push

A

Where a tight labour market means that workers can push for wage rises therefore causing firms to increase their prices to cover up for this increase

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18
Q

Demand Pull

A

Where AD > AS so there’s an increase in the price level

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19
Q

Demand deficient

A

-Where there isn’t enough AD in economy to employ the available labour

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20
Q

Balance Of Payment

A

X-M

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21
Q

Balance Of Trade

A

Visible X - Visible M

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22
Q

De industrialisation

A

Where there is a fall in the proportion of national output contributed by the manufacturing industry.

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23
Q

Globalisation

A

The ability to produce goods anywhere in the world and sell them anywhere in the world

24
Q

Real

A

Figures adjusted for inflation

25
Q

Natural Rate Of Unemployment

A

Rate of unemployment that’s consistent with inflation

26
Q

Occupational Immobility

A

Where workers lack certain skills so therefore find it difficult to secure jobs as patterns for demand change

27
Q

Factors of Supply Side Fiscal Policy

A

Labour market incentives
Capital Spending
Human capital (education/training)
Entrepreneurship (fund start ups)

28
Q

Narrow Money

A

Notes/Coins/balances

To be used for normal transactions

29
Q

Broad Money

A

Money inaccessibly held in banks or building societies

30
Q

Trade Off

A

Where one macroeconomic objective has to be curtailed in favour of another.

31
Q

Exports

A

Goods/services sold abroad.

It generates income for the home country

32
Q

Imports

A

Goods/Services purchased from abroad.

Leads to expenditure for the home country.

33
Q

Employment

A

Where labour is actively engaged in a productive activity usually in exchange for payment ie wages.

34
Q

Unemployment

A

Those without a job but are seeking work at current wage rates.

35
Q

Economic Indicator

A

Economic statistics that provide information about the expansions and contractions of business cycles.

36
Q

Nominal

A

Not adjusted for inflation.

37
Q

GDP per capita

A

GDP divided by population.

It is a measure of living standards

38
Q

Index

A

A weighted average of a group of items compared to a given base value of 100

39
Q

GDP

A

The total value of goods and services produced in he economy.

40
Q

+Ve output gap

A

When ACTUAL GDP exceeds TREND GDP thus increasing inflationary pressure.

41
Q

-ve Output Gap

A

Where the economy is producing less than it’s trend output.

42
Q

Weighting

A

Where a commodity is given a weighting proportional to its importance in the pattern of consumer spending.

43
Q

Balance Of Payments

A

X-M

44
Q

Flow

A

Measured over a specified period of time

45
Q

Stock

A

A quantity measured at a particular point in time

46
Q

Income induced

A

Increases as income increases

Decreases as income decreases

47
Q

Net govt Spending

A

Difference between government spending and taxation.

48
Q

Privatisation

A

He sale of government owned assets to he private sector

49
Q

LRAS

A

economy’s productive capacity

50
Q

Natural rate of unemployment

A

Rate of unemployment that is consistent with a stable rate of inflation
It’s the level of output where LRAS becomes vertical.

51
Q

Supply side Shock

A

Something that will

52
Q

Total Factor Productivity

A

The overall productivity of inputs used by a firm in order to produce a particular level of output.

53
Q

Deflation

A

Where prices persistently fall

54
Q

Participation Rates

A

The proportion of a country’s population that makes up the country’s labour force.

55
Q

Tight Labour Market

A

Where firms have to increase their wages in order to attract (keep) the labour they require.

56
Q

Balance Of Trade

A

Visible X - Visible M

57
Q

+ of a BALANCE DEFICIT

A

+Fine if current account deficit can be financed by things like inward investment.
+Deficit is self correcting as of its due to great consumer demand the economic cycle will at some point reduce it.
+Some of the deficit may be due to imports of capital goods which in the long term will boost productivity and expand economic capacity.

58
Q

-of a BALANCE DEFICIT

A
  • Could indicate UK has lost competitiveness because of low investment & low productivity
  • continuos excess of imports leads to rising withdrawals from circular flow which will in turn reduce levels of output and employment
  • those in the manufacturing industry might not be readily employed for work in other sectors. So if UK is to have full employment it needs growing export markets to accommodate these workers

Economics (2 decks)

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