Macro Definitions Flashcards
(115 cards)
0
Q
What is real GDP?
A
The country’s output measure in constant prices and so adjusted for inflation
1
Q
What is GDP?
A
The total values of goods and services produced by factors of production based in an economy. Can be measured by the output, income and expenditure methods
2
Q
What is nominal GDP?
A
The country’s output measured in current prices and so not adjusted for inflation
3
Q
What are leakages?
A
Parts of income that are not passed back into the circular flow
4
Q
What are injections?
A
Spending on domestic output that comes from outside the circular flow between domestic households and domestic firms
5
Q
What is the circular flow of income?
A
A model showing the flow of output, income and expenditure between producers/ firms and households/ consumers
6
Q
What are factor services?
A
The services provided by the factors of production
7
Q
What’s an index number?
A
A number that allows us to change in an item when compared to some base period
8
Q
What is investment?
A
Spending on capital goods including plant, equipment and infrastructure It is an injection into the circular flow of income
9
Q
Define economics
A
The study of issues that affect economies as a whole
10
Q
What are net exports?
A
The value of exports minus the value of imports
11
Q
What is distribution of income?
A
How national income is divided amongst groups of individuals or households or factors of production
12
Q
What is consumer expenditure?
A
Spending by households on consumer-products
13
Q
What is government spending?
A
Spending by central and local government on goods and services
14
Q
What are Exports?
A
Goods and services sold abroad
15
Q
What are imports?
A
Goods and services bought from abroad
16
Q
Actual economic growth
A
An increase in real GDP
17
Q
AD
A
the total demand for goods and services produced within an economy over a given period of time
17
Q
Appreciation
A
The rise in value of one currency against another
18
Q
Austerity
A
Economic policy aimed at reducing a governments deficit. Can be achieved through increases in government revenues mainly by increasing tax and it a reduction in G
19
Q
AS
A
The total amount that producers in an economy are willing and able to supply at a given price level in a given period of time
20
Q
Automatic stabilisers
A
Forms of government spending and taxation that dampen down fluctuations without any deliberate changes in government policy
21
Q
Balanced budget
A
Where G equals revenue
22
Q
Budget
A
A statement of a G and T revenues for the next financial year
23
Balance of payments
A record of all the transactions that cause money to flow across national boundaries
24
Budget deficit
When G exceeds tax revenue
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Budget surplus
When tax exceeds G
26
Capital market
A stock or bond market where firms can raise money for I purposes
27
Claimant count
The no. Of people claiming U related benefits. One of the measures of U
28
Comparative advantage
The ability to produce a product at a lower opportunity cost than other countries, regions, firms or people
29
Consumer price index
Preferred means of inflation which exudes housing costs but includes all households
30
Closed economy
An economy operating without imports or exports
31
Corporation tax
A tax on firms profits; a direct tax
32
Cost push inflation
Increases in the price level resulting from increases in costs of production
33
Current account balance
A record of a country's trade in goods, trade in services, income and current transfers
34
Cyclical trade deficit
A trade deficit which arises due to changes in the economy's cycle
35
Cyclical unemployment
Unemployment resulting from a lack of AD - demand deficient unemployment
36
Deflation
A sustained fall in the average price level
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Deflationary fiscal policy
Measures using government spending and taxation designed to reduce aggregate demand
38
Demand management policies
This refers to the range of monetary and fiscal policies to influence the aggregate demand for goods or services in an economy
39
Demand pull inflation
Increases in the average price level resulting from excessive increases in aggregate demand
40
Depreciation
A fall in the value of one currency against another
41
Deregulation
The removal of laws and regulations which restrict competition
42
Direct taxes
Taxes on income and wealth of people and firms. income and Corporation taxes are direct taxes
43
Discretionary fiscal policy
Deliberate changes in government spending, borrowing and taxation to affect aggregate demand
44
Discretionary income
Income after the deduction of direct taxes and the essential bills and the addition of state benefits
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Disequilibrium
The situation of Imbalance
46
Disposable income
Income after the deduction of direct taxes and the addition of State benefit
47
Dividends
A share in the profits of firms which is distributed to shareholders
48
Domestic trade
The exchange of products within an economy
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Dumping
When a producer in one country exports the product to another country at a price below that which it charges in its own country or below the costs of supply
50
Economic cycle
Variations in the annual rate of growth of an economy over time. The stages of the cycle include recovery, boom, slow down and recession
51
economic growth
The growth in the value of output of an economy and in the long run an outward shift in the production possibility frontier
52
Economically inactive
Those who are of working age but are neither in work nor actively seeking work
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Economic stability
The avoidance of volatility in economic growth rates, inflation, unemployment and exchange rates
54
exchange rate
the price of a currency in terms of another currency
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expansionary monetary policy
changes in the money supply, rate of interest and/or exchange rate which are designed to stimulate AD
56
fiscal drag
the reduction in disposable income that occurs if tax bands are not adjusted in line with inflation
57
fiscal policy
a G's policy regarding taxation and public spending
58
foreign direct investment
investment from one country into another country that involves establishing operations or acquiring tangible assests
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free trade
when trade is allowed to occur without any form of restrictions such as a tariff or quota
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frictional unemployment
U arising when people are between jobs
61
GDP per capita
total value of G and S produced by f of p based in an economy divided by the population
62
geographical immobility
the movement of an economic resource from one area to another eg labour
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hot money flows
flows of short-term finance that moves around the world to take advantage of difference in interest rates and possible exchange rate changes
64
household wealth
the value of the stock of assests
65
human capital
knowledge and skills that workers require through ed, training and experience
66
hyperinflation
a very high rate of inflation which causes serious economic problems and political instability
67
hysteresis
U generating U by reducing confidence and relevance of skills of U people
68
imports
products bought from abroad
69
immobility of labour
barriers to the movement of people between area and jobs
70
YED
a measure of the responsiveness of demand to changes in real incomes of consumers
71
indirect taxes
taxes on C of G and S
72
inflation
a steady and continuous rise in average price levels
73
inflationary noise
the distortionary effect inflation can have on price signals
74
inflationary pressures
demand and supply-side pressure that can cause a rise in the general price level
75
inflation target
the CPI inflation target of the B of E is 2% plus/minus 1%.
76
infrastructure
the transport links, communications networks, sewage systems, energy plants etc for the efficient running of a country.
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international trade
the exchange of g and s across national boundaries
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keynesian economics
believe that market failure is a significant problem and that govt intervention can improve the situation
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macro-equilibrium
a situation where ad equals as and so there are no forces to change the price level and output
80
labour force survey
the number of people able, available and willing to work at prevailing wage rates
81
marginal propensity to consume
the proportion of any additional income which is spent rather than saved
82
marginal propensity to save
the proportion of any additional income which is saved rather than spent
83
market failure
under or over consumption of a product or service at a given price level
84
menu costs
costs involved in having to change prices as a result of inflation
85
monetarists
people who believe that the only cause of inflation is the money supply growing faster than output
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monetary policy
changes in the money supply, rate of interest and exchange rate
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monetary policy committee
a committee of the b of e that determines the rate of interest with the objective of meeting the g's inflation target
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money supply
the b of e has the ability to inject money into the economy using a process called quantitative easing
89
multiplier
an increase in an injection into the c f of y causing a greater increase in ad
90
natural rate of U
the rate of u that exists when the labour market is in equilibrium
91
potential economic growth
increases in the ability of a country to produce g and s
92
productivity
output per worker per period of time
93
progressive taxes
taxes which take a greater % of the y of rich people than that of poor people
94
public sector net cash requirement
the amount the g sector needs to borrow, over and above tax revenue collected, to finance planned g spending in a given year
95
rate of interest
the cost of borrowing and return to savers
96
rate of U
the no. of people who are willing and able to work but are not in work as a percentage of the labour force
97
rate of inflation
a steady and continuous rise in average price levels expressed as a percentage
98
reflationary fiscal policy
measures designed to increase ad
99
regional policy
govt measure designed to influence incomes, population and the no. of firms in a particular area
100
regional U
people who are willing and able to work but do not have work while there are job vacancies in another area
101
regressive taxes
taxes which take a greater % of the income of poor people than that of rich people
102
retail price index
a weighted measure of changes in consumer prices
103
shoe leather costs
costs involved in moving money around during a period of inflation in a bid to maintain its real value
104
structural U
a decline in certain industries and occupation caused by changes in demand and supply
105
supply-side polices
policies designed to increase aggregate supply by improving the efficiency of product and labour markets
106
sustainable economic growth
economic growth achieved in a way that does not endanger the country's ability to achieve economic growth in the future
107
tariff
a tax on imports
108
transfer payments
money transferred with out the exchange of goods or services.
109
transmission mechanism
which monetary policy decisions affect the economy in general and the price level in particular. It is characterised by long, variable and uncertain time lags.
110
trend growth
the expected annual increase in the ability of a country to produce g and s
111
U
when people are willing, able and available to work but who are currently not in paid employment despite and active search
112
U trap
a situation where some people are financially better off living on U benefits than working
113
wealth distribution
the extent to which diff groups of h'holds share in total wealth of the country
