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AS Economics > Macro: National Economy > Flashcards

Macro: National Economy Flashcards

(68 cards)

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0
Q

Aggregate demand

A

Total consumption expenditure within an economy over a certain period of time

Consumption + investment + gov spending + net exports

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1
Q

Aggregate supply

A

Total output produced in a given time

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2
Q

Economic cycle

A

Shows the fluctuations of real output/ GDP above and below the tend rate of growth of an economy over time

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3
Q

Circular flow of income

A

The exchange of factors of production and money from firms and households in an economy

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4
Q

Multiplier effect

A

Increase in AD or spending is more than proportionate to increase in national income

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5
Q

Accelerator effect

A

Increase in economic growth (GDP) leads to a more than proportionate increase in investment

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6
Q

Unemployment

A

Those without a job and seeking work at the present wage rate

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7
Q

Define participation rates

A

Proportion if country’s population that makes up the labour force

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8
Q

Define demand pull inflation

A

Where AD exceeds AS leading to an increase in the level of prices

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9
Q

Define cost push inflation

A

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

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10
Q

Define cyclical unemployment

A

Demand deficient unemployment that occurs as a result of the economic cycle

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11
Q

Define demand deficient unemployment

A

Insufficient AD in the economy to employ the available labour

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12
Q

What is frictional/search unemployment?

A

When people are between jobs

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13
Q

What is structural unemployment

A

Unemployment resulting from changing patterns of demand in the labour market not matching the skills and locations of those seeking work

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14
Q

Define voluntary unemployment

A

Workers who are not prepared to take a job at current wage levels

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15
Q

Define balance of payments

A

Exports minus imports

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16
Q

Define recession

A

Two successive quarters where change of economic growth is negative

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17
Q

What are the 4 indicators used to measure the macroeconomy

A

Economic Growth (GDP)
(Un)Employment
Inflation
Balance of payments (Net exports)

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18
Q

State difference between real GDP and nominal

A

Real takes into account inflation

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19
Q

Define negative output gap

A

Economy is producing less / lower real growth than the underlying trend output/ growth

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20
Q

Define positive output gap

A

When actual GDP / output exceeds trend GDP / output

Increasing inflationary pressure

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21
Q

Define fiscal policy

A

Government policies regarding adjusting taxation and/or governent expenditure

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22
Q

Define monetary policy

A

Controlling macroeconomy via changes in monetary variables such as money supply or interest rates

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23
Q

Define disposable income

A

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

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24
Define injection
Money that originates outside the circular flow of income and so will increase national income/output/expenditure
25
Define withdrawal
Money not passed on in the circular flow and has the effect of reducing national income/output/expenditure
26
Define savings
A withdrawal from the circular flow
27
Define investment
Spending by firms on buildings, machinery and improving the skills of the labour force
28
What is privatisation
Sale of government owned assets to the private sector
29
Define Long Run Aggregate Supply
Economy's productive capacity
30
What is inflation
A persistent increase in the level of prices
31
Define deflation
A persistent fall in the level of prices
32
What is the credit crunch
Where borrowing becomes more expensive or unavailable
33
What is a tight labour market
Where firms have to increase wages to attract the labour they require
34
Define balance of trade
Visible exports minus visible imports
35
Define visibles
Exports or imports that are tangible, you can see and touch as they cross international boundaries
36
Define invisibles
Intangibles such as the provision of insurance or banking services
37
Define deindustrialisation
Fall in proportion of national output accounted for by the manufacturing sector in the economy
38
Define interest rates
The cost of borrowing money or the reward for saving money
39
Define exchange rate
Price of exchanging one currency into another
40
What is the difference between narrow and broad money
Narrow: physical notes and coins in circulation that is available for normal transactions Broad: narrow money plus money that is held in banks and building societies but not immediately accessible
41
Explain difference between current and capital spending
Current: govt spending on day-to-day running of public sector in sliding raw materials and wages of public sector workers Capital: govt spending to improve productive capacity of nation including infrastructure, schools, hospitals
42
Define budget deficit
Govt spending exceeds govt receipts/revenue in a financial year
43
Define budget surplus
Govt receipts/ revenue exceeds govt spending in a financial year
44
Explain difference between contractionary and expansionary policies
Expansionary: to increase AD - stimulate growth Contractionary: to decrease AD - control growth/inflation
45
What is deregulation
Process of removing govt controls from markets - helps enable more suppliers to enter a market
46
Economic growth
Capacity of the economy to produce more goods and services over time
47
Gross domestic product
Total value of the goods and services produced in an economy
48
Trade off
One macro economic objective has to be curtailed in favour of another
49
Import
Good or services purchased from abroad
50
Exports
Goods or services sold abroad
51
Employment
Where labour is actively engaged in a productive activity usually in exchange for payments such as wages
52
Economic indicators
Economic statistics that provide information about the expansions and contractions of business cycles
53
GDP per capita
GDP divided by the population - a measure of living standards
54
Index numbers
A weighted average of a group of items compared to a base value of 100
55
Weighting
Where a commodity is given a writhing proportional to it's importance in the general pattern of consumer spending
56
Economic models
Used to show essential characteristics of complicated economic conditions in order to analyse them and predict the result of changes in variables
57
Stock
Quantity measured at a particular point in time
58
Positive/ negative expectations
Businesses expect future sales and profits to improve/fall due to factors like increased/falling aggregate demand
59
Keynesian
The view of the influential British economist John Maynard Keynes who suggested how govern beta could cure mass unemployment
60
Classical view
Economists who believed that recessions and slumps would cure themselves
61
Natural rate of unemployment
Rate of unemployment that is consistent with a stable rate of inflation
62
Monetary policy committee
A committee of economists and central bankers who meet monthly and decide whether or not to change the rate of interest
63
Boom/busy policy
Government using macroeconomic tools to stimulate and then contract the economy
64
Total factor productivity
Overall productivity of inputs used by a firm in producing a particular level of output
65
Discouraged workers
Workers who leave the labour market because despite numerous attempts they are unable to find a job
66
Globalisation
Ability to produce goods anywhere in the world and sell them in any country
67
Current account equilibrium
Where current account exercises no effect on domestic macroeconomy

AS Economics (2 decks)

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