macro

Question 1

Accelerator effect

Answer 1

The relationship between the change in new investment and the rate of change of national income

Question 2

aggregate demand

Answer 2

total planned expenditure in the economy

Question 3

aggregate supply

Answer 3

total value of goods and services supplied in the economy

Question 4

balance of payments

Answer 4

a record of a country’s international transactions over a year

Question 5

balance of trade

Answer 5

visible exports minus visible imports

Question 6

balanced budget

Answer 6

where government receipts equal government spending in a fiscal year

Question 7

broad money

Answer 7

money half in banks and building societies that is not immediately accessible

Question 8

budget deficit

Answer 8

where the government spending exceeds spending receipts in a fiscal year

Question 9

budget surplus

Answer 9

where the government receipts exceeds government spending in a fiscal year

Question 10

circular flow of income

Answer 10

model explaining the equilibrium level of national income

Question 11

consumption

Answer 11

spending by domestic households on goods and services

Question 12

cost push inflation

Answer 12

where increased costs of production result in firms increasing their prices leading to an increase in general price level

Question 13

CPI

Answer 13

consumer price index, used to measure inflation

Question 14

cyclical unemployment

Answer 14

demand-deficient unemployment resulting from a downturn in the economic cycle

Question 15

deflation

Answer 15

A situation where the general price levels fall.

Question 16

Demand management

Answer 16

Using monetary and fiscal policy to control aggregate demand to minimise fluctuations in the economic cycle.

Question 17

Demand-pull inflation

Answer 17

Where aggregate demand exceeds aggregate supply leading to a price level increase.

Question 18

Deregulation

Answer 18

the process of removing government controls from markets

Question 19

Discretionary fiscal policy

Answer 19

The deliberate manipulation of government spending and taxation to influence the economy.

Question 20

Disposable income

Answer 20

Income available to households after the payment of income tax and national insurance contributions

Question 21

Economic cycle

Answer 21

The tendency for economic growth to fluctuate over time.

Question 22

Economic growth

Answer 22

An increase in the productive capacity of a nations over time.

Question 23

Exchange rate

Answer 23

The price of one currency expressed in terms of another.

Question 24

Exports

Answer 24

Goods and services sold abroad.

Question 25

Fiscal policy

Answer 25

control of the economy via the use of taxation and government spending

Question 26

Frictional unemployment

Answer 26

People between job, i.e engaged in job search

Question 27

GDP

Answer 27

gross domestic product-The total value of goods and services produced in the economy

Question 28

Geographical immobility

Answer 28

Where workers find it difficult to move where employment opportunities may be

Question 29

Globalisation

Answer 29

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

Question 30

Hot money

Answer 30

Money that is liable to rapid transfer from one country to another.

Question 31

human capital

Answer 31

The skills, abilities, knowledge and motivation of labour

Question 32

Imports

Answer 32

Purchases of goods and services from abroad

Question 33

Income

Answer 33

a flow of income to a factor of production over a period of time e.g salary

Question 34

Inflation

Answer 34

A persistent increase in the general price level

Question 35

Injection

Answer 35

Money that originates outside the circular flow of income and so boosts national income

Question 36

Interest rate

Answer 36

The cost of borrowing, the reward for saving or the opportunity cost of spending.

Question 37

Investment

Answer 37

spending by firms on new capital equipment

Question 38

Macroeconomics

Answer 38

Study of the economy as a whole

Question 39

Monetary policy

Answer 39

controlling the economy via changes in interest rates and the money supply

Question 40

Mortgage

Answer 40

loan to buy a property

Question 41

MPC

Answer 41

monetary police committee of the bank of England, made up of economists and bankers who meet monthly to decide whether of not to alter the base rate of interest.

Question 42

Money supply

Answer 42

The total amount of money in the economy

Question 43

multiplier effect

Answer 43

where an increase of decrease in spending leads to a larger than proportional change in national income

Question 44

Narrow money

Answer 44

Notes, coins and balances available for current transactions

Question 45

Negative equity

Answer 45

Where the value of one's house is lower than the outstanding mortgage

Question 46

Negative output gap

Answer 46

Where the economy is producing less than its trend output

Question 47

Nominal

Answer 47

not adjusted for inflation

Question 48

Occupational immobility

Answer 48

where workers find it difficult to secure 'new' jobs as patterns of demand and employment change, as they lack the necessary skills

Question 49

Participation rate

Answer 49

Proportion of the country's working age population that makes up the labour force

Question 50

Positive output gap

Answer 50

When actual GDP exceeds the trend rate of GDP, increasing inflationary pressure

Question 51

Privatisation

Answer 51

Sale of government owned assets to the private sector

Question 52

Real GDP

Answer 52

GDP adjusted for the effects of inflation

Question 53

Recession

Answer 53

2 or more quarters of negative growth of GDP

Question 54

Structural unemployment

Answer 54

Unemployment caused by a change in the pattern of demand in an economy

Question 55

Subsidy

Answer 55

A payment made by government to producers to encourage greater production of a good or service

Question 56

Supply-side policies

Answer 56

A range of measures designed to increase AS by improving the efficiency of markets

Question 57

Tariff

Answer 57

A tax on imports

Question 58

Transmission Mechanism

Answer 58

How changes in the base rate of interest influence the components of AD.

Question 59

Unemployment

Answer 59

Those of a working age who are willing and able to work who do not currently have a job

Question 60

Unemployment trap

Answer 60

Where individuals receive more in benefit payments than they would in income in employment

Question 61

Voluntary unemployment

Answer 61

Workers not prepared to take a job at current wage rates

Question 62

Wealth

Answer 62

A stock of owned assets, e.g housing property, shares

Question 63

Wealth effect

Answer 63

Where a rise in the value of household wealth encourages consumers to spend more and save less

Question 64

Withdrawals

Answer 64

Money taken out of the circular flow of income, which reduces national income

Question 65

productive capacity

Answer 65

Maximum possible output of an economy

Question 66

real income

Answer 66

the income of individuals or nations after adjusting for inflation. It is calculated by subtracting inflation from the nominal income.

Question 67

recovery

Answer 67

A period of increasing business activity signaling the end of a recession.

Question 68

current account

Answer 68

The current account consists of the balance of trade, net primary income or factor income (earnings on foreign investments minus payments made to foreign investors) and net cash transfers, that have taken place over a given period of time