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Macro 1 > Macro 1.8 > Flashcards

Macro 1.8 Flashcards

1
Q

What are seasonal fluctuations?

A

Variations of economic activity resulting from seasonal changes in the economy

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2
Q

What are cyclical fluctuations?

A

Upswing and downside in the economic activity taking place over 4-12 years. Its caused by demand-side and supply-side shocks

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3
Q

What is a boom/expansion?

A

The level of real output becomes greater than the trend level of output.

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4
Q

What is a slowdown?

A

Occurs when the rate of growth decelerates, but national output is still rising

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5
Q

What is a recession?

A

Real national output falling for 6 months or more

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6
Q

What is a recovery?

A

When real GDP begins to grow after the end of a recession

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7
Q

What is the output gap?

A

The difference between the actual level of GDP and its estimated potential level

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8
Q

What is long-term unemployment?

A

People unemployed for at least one year

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9
Q

What is the claimant count?

A

The number of people officially claiming unemployment related benefits

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10
Q

What is the labour force survey?

A

All those actively seeking and available for work, whether they’re claiming benefit or not

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11
Q

What is the labour force?

A

The number of people of working age who are able, available and willing to work

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12
Q

What is full employment?

A

When there are enough unfilled job vacancies for all the unemployed to take work

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13
Q

What is a discouraged worker?

A

People out of work for a long time who may give up on job search and effectively leave the labour market

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14
Q

Who are the economically inactive?

A

Those who are of working age but neither in work nor actively seeking paid work

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15
Q

What is the employment rate?

A

The percentage of the population of working age in full-time or part-time paid work

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16
Q

What is the unemployment rate?

A

The percentage of the economically active population who are unemployed

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17
Q

What is demand-pull inflation?

A

A rising price level caused by an increase in aggregate demand, this is also known as demand inflation.
Note: This can be shown by an outwards shift of the AD curve (to the right)

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18
Q

What is cost-push inflation?

A

A rising price level caused by an increase in the costs of production.
Note: This can be shown by an inwards shift of the SRAS curve (to the left)

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19
Q

What is frictional unemployment?

A

Short term unemployment when a workers switching between jobs.

20
Q

What is geographical immobility of labour?

A

When workers are unwilling or unable to move from one area to another in search of work

21
Q

What is the occupational immobility of labour?

A

The inability to switch between different occupations due to lack of transferable skills

22
Q

What is structural unemployment?

A

When the demand for labour is less than the supply of labour in an individual labour market

23
Q

What is cyclical unemployment?

A

Unemployment linked to the economic cycle and occurs when there is a negative output gap.
Note: This is also known as Keynesian unemployment and demand-deficient unemployment.

24
Q

What is seasonal unemployment?

A

Workers getting laid off on a short-term basis at certain times of the year (e.g. farming, ski resorts, festivals)

25
What is deindustrialisation?
The decline of manufacturing industries, together with coal mining
26
What is demand-side unemployment?
Unemployment which relates to the impact of changes in aggregate demand on the economy.
27
What is supply-side unemployment?
Unemployment which relates to changes in the potential output of the economy which is affected by the factors of production.
28
What is the real wage?
The purchasing power of the nominal (or money) wage. Note: real wages fall when inflation is higher than the rise in the nominal wage rate and real wage rises when the nominal wage rate increases faster than inflation.
29
What is real-wage unemployment?
Unemployment caused by real wages being stuck above the equilibrium real wage.
30
When does the equilibrium unemployment exist?
When the economy's aggregate labour market is in equilibrium, meaning it is the same as the natural level of unemployment.
31
What is the NRU (natural rate of unemployment)?
The rate of unemployment when the aggregate labour market is in equilibrium.
32
What is voluntary unemployment?
When a worker chooses to remain unemployed and refuses job offers at the current market wage rates.
33
What is involuntary unemployment?
When a worker is willing to work at current market wage rates but there are no jobs available.
34
What is the causes of demand-pull inflation?
Lower income tax, Lower interest rates, a rise in consumption, an improved availability of credit/money supply, weak exchange rates, fast growth in other countries and a rise in consumer confidence.
35
What is the causes of cost-push inflation?
Increased wages, Stronger trade union power, higher raw material costs, higher taxes, higher import prices and natural disasters.
36
What is wage-cost inflation?
A rising price level caused by an increase in wages and salaries.
37
What is import-cost inflation?
A rising price level caused by an increase in the cost of imported energy, food, raw materials and manufactured goods.
38
What is an emerging-market country?
A country that is progressing towards becoming more economically advanced by means of rapid growth and industrialisation.
39
When does a current account deficit occur?
When currency outflows in the current account exceed currency inflows. Note: This can also be shortened to exports less than imports
40
When does a current account surplus occur?
When currency inflow in the current account exceeds currency outflow. Note: This can also be shortened to exports greater that imports
41
What is the balance of trade in goods?
The part of the current account measuring payments for imports and exports of goods.
42
What is the balance of trade in service?
The part of the current account and is the difference between the payments for the exports of the services and the payments for the imports of services.
43
What is net investment income?
The difference between inward and outward flows of investment income.
44
What are transfers?
Payments flowing between countries in forms such as foreign aid, grants, private transfers and gifts. They are payments that are made without anything of economic value being received in return.
45
What is export-led growth?
In the short-run it's economic growth resulting from an increase in exports as a component of aggregate demand. In the long-run it's economic growth and increased international competitiveness of exporting industries.
46
What is reindustrialisation?
Growth of manufacturing industries to replace industries which have disappeared or declined significantly in size. Note: It's the opposite of deindustrialisation

Macro 1 (4 decks)

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