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Economics AQA > Macro definitions > Flashcards

Macro definitions Flashcards

1
Q

availability of credit

A

funds available for firms and households to borrow

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2
Q

claimant count

A

those registered as unemployed and claiming unemployment benefits

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3
Q

consumer prices index (CPI)

A

official measures used to calculate the rate of consumer price inflation, using a basket if common goods

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4
Q

economic shock

A

unexpected events and their effects on economies; may demand side or supply side

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5
Q

exchange rate

A

the price of a currency measured in terms of another currency

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6
Q

exports

A

domestically produced goods and services sold to residents of other countries

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7
Q

gross national income (GNI)

A

sum of value added by all producer who reside in a nation, plus product taxes not included in the value of output, plus receipts of primary income from abroad.

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8
Q

gross national product (GNP)

A

GDP + net property income from abroad

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9
Q

imports

A

non domestically produced goods and services sold to residents of this country

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10
Q

inflation target rate

A

the CPI inflation target rate set by the government, which the Bank of England attempts to achieve; currently 2%

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11
Q

job seekers allowance (JSA)

A

unemployment related benefit

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12
Q

labour force survey

A

a quarterly survey of UK households, recording information on the personal employment circumstances of the respondents

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13
Q

liquidity

A

the ease with which an asset can be turned into cash without loss or delay

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14
Q

macroeconomic stability

A

occurs when there is low volatility of key macroeconomic indicators

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15
Q

marginal propensity to consume (MPC)

A

the proportion of an increase in disposable income that is spent on consumer goods

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16
Q

national wealth

A

the stock of all goods with the value in an economy

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17
Q

price index

A

an index number showing the extent to which a set of prices has changed in comparison to the prices in the base year

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18
Q

purchasing power parity (PPP)

A

adjustments of exchange rates to reflect the actual purchasing power of a currency

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19
Q

retail prices index (RPI)

A

an older measure used to calculate the rate of consumer price inflation

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20
Q

wealth

A

stock of assets

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21
Q

GDP

A

The total value of goods and services produced within an economy in a given time.

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22
Q

Economic growth

A

when real GDP is rising (output is increasing) so more goods and services are being produced, unemployment is falling, consumer confidence is rising and living standards are rising

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23
Q

trend growth in GDP

A

the average rate of growth

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24
Q

economic recovery

A

a period of economic growth following a recession (short run economic growth)

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25
recession
a fall in GDP over two consecutive quarters
26
slump
a prolonged period of recession
27
economic boom
when an increase in GDP is above trend growth GDP
28
fiscal policy
involves changes in taxation, government spending and borrowing to influence AD
29
monetary policy
involves the central bank changing the bank rate (and thus interest rates) and changing the money supply to influence AD
30
supply side policies
aims to shift LRAS to the right through changes in the quantity and quality of FoP.
31
trade off
giving up one thing in order to obtain another
32
the current account
records all payments for imports and exports and income flows
33
the financial account
records all financial transactions in assets and liabilities (debts)
34
real GDP
GDP adjusted for inflation
35
national income
measures the monetary value of the flow of output of goods and services
36
investment
spending by firms on capital
37
human development index (HDI)
a measure of economic welfare based of the average three factors: - standard of living - life expectancy - educational attainment
38
positive output gap
growth in GDP is above trend growth in GDP
39
negative output gap
growth in GDP is below trend growth in GDP
40
short run aggregate supply
total supply of goods and services within an economy at one moment in time.
41
long run aggregate supply
total amount of goods and services that all firms in an economy are willing and able to produce and sell in the long-run, at a given price level.
42
flexible labour market
its easy to alter the quantity and skills of workers - the workforce is occupationally and geographically mobile
43
consumer durables
items that provide a stream of benefits over a long period of time e.g. cars
44
non consumer durables
item which yield a short term benefit e.g. chocolate
45
consumer services
provision of something non physical which yield a benefit e.g. insurance
46
saving
income that is not spend
47
disposable income
the amount of money an individual or household has available for spending and saving after taxes
48
discretionary income
income remaining after deduction of taxes, social security charges, and basic living costs.
49
the multiplier
describes the fact that a change in injections or withdrawals will have a larger effect on GDP
50
unemployment
adults of working age, able and willing to work who cannot find a job
51
economically active
those either in work or seeking work
52
economically inactive
All those not seeking paid employment eg children, the sick, the disabled, pensioners, full-time students, parents who stay at home to look after children etc
53
frictional unemployment
those in between jobs for a short period of time – not major concern
54
structural unemployment
caused by the decline of major industries such as coal mining, steel production, manufacturing. The structurally unemployed lack the skills that the new expanding industries require
55
technological unemployment
caused when humans are replaced by technology; this is a form of structural unemployment.
56
seasonal unemployment
occurs when people are temporarily out of work due to the seasonal nature of certain industries
57
the natural rate of unemployment
the rate of unemployment that is consistent with stable inflation
58
demand deficient/cyclical unemployment
caused by recession and a lack AD and therefore associated with a negative output gap.
59
classical/real wage unemployment
Classical or real wage unemployment occurs as a result of real wages being above their market-clearing level leading to an excess supply of labour
60
voluntary unemployment
occurs when a worker chooses not to accept work at existing wage rates, for example a worker caught in the unemployment trap due to generous welfare benefits.
61
unemployment trap
when there is limited financial incentive to work usually due to generous welfare benefits
62
replacement ratio
out of work income / net income from employment
63
occupational immobility
the inability of labour to switch between different occupations and is affected the level of transferable skills and education requirements of some jobs
64
geographical immobility
the inability of labour to move from one area to another in search of work
65
inflation
a general sustained rise in the average price level
66
disinflation
when the rate of inflation is declining
67
deflation
a fall in the general average price level
68
demand pull inflation
occurs when aggregate demand exceeds aggregate supply
69
cost push inflation
caused by an increase in the costs of production
70
quantity theory of money
the belief that inflation is caused by an increase in the money supply MV=PQ (Q and V stay constant)
71
velocity of circulation
the number of times that a unit of currency is used in transactions to purchase goods and services in a year
72
deflation a period when the general price level falls
a period when the general price level falls
73
malign deflation
caused by a fall in AD
74
benign deflation
caused by a rise in productive capacity without a corresponding rise in AD
75
paradox of thrift
if people save more in a recession, it will reduce consumption and aggregate demand will fall, slowing economic growth and lowering savings levels.
76
exports
domestically produced goods or services that are sold to residents of other countries
77
imports
goods or services produced in another country and sold to residents of this country
78
current account
records the day to day international trade in goods and services. includes services trade, transfers (secondary income), investment income/income from employment (primary income) and goods trade
79
deficit
occurs when the value of imports exceeds the value of exports
80
surplus
occurs when the value of exports exceed the value of imports
81
the trade gap
a situation in which a country buys more from other countries than it sells to other countries
82
deindustrialisation
the reduction of industrial activity or capacity in a region or economy
83
globalisation
the process by which businesses or other organizations develop international influence or start operating on an international scale.
84
primary income balance
Includes incomes from interest, profits, dividends generated from foreign investment and also migrant remittances i.e. payments from people living and working overseas
85
secondary income balance
Includes spending on military aid, overseas development aid
86
money supply
the total quantity of money circulating in the economy
87
narrow money
notes and coins in circulation and p balances in bank accounts with instant access e.g. current accounts
88
broad money
cash deposited in bank accounts and building society accounts to which savers do not have instant access (less liquid savings)
89
quantitative easing
A central bank uses quantitative easing (QE) to increase the supply of money in the banking system designed to encourage commercial banks to lend at cheaper interest rates
90
exchange rates
the price of one currency in terms of another currency
91
public goods
goods that benefit and can be used by all members of society
92
merit goods
a good where production or consumption creates external benefits but is often under consumed by society
93
current spending
spending on wages and consumables
93
capital spending
spending on machinery or infrastructure (social capital)
94
transfer payments
payments from one group of citizens to another - welfare state
94
indirect taxes
a tax levied on goods and services rather than on income or profits
94
direct taxes
a tax, such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services.
95
excise duties
a tax that is designed to discourage the purchase of goods that harm consumer health or the environment.
96
proportional taxes
everyone pays the same tax rate despite how much they earn
97
progressive taxes
individuals pay a greater proportion of tax as their income rises
98
regressive taxes
lower income groups pay a greater proportion of their income on tax
99
budget deficit
occurs whenever government spending exceeds government revenue from taxation and other sources of income
100
budget surplus
occurs when government revenue exceeds government spending
101
balanced budget
occurs when government revenue equals government spending
102
crowding out effect
when government spending or borrowing displaces private sector spending or borrowing

Economics AQA (11 decks)

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