Flashcards in Macroeconomic definitions Deck (95):
1
Aggregate demand
The total demand for a country's goods and services at a given price level and in a given time period
2
Price level
The average of each of the prices of all the products produced in an economy
3
Consumer expenditure
Spending by households on consumer products
4
investment
Spending on capital goods
5
Government spending
Spending by the central government and local government on goods and services
6
Exports
Products sold abroad
7
Imports
Products bought from abroad
8
Net exports
The value of exports minus the value of imports
9
Transfer payments
Money transferred from one person or group to another not in return for any good or service
10
Job seeker's allowance
A benefit paid by the government to those unemployed and trying to find a job
11
Trade surplus
The value of exports exceeding the value of imports
12
Trade deficit
The value of imports exceeding the value of exports
13
Consumer confidence
How optimistic consumers are about future economic prospects
14
rate of interest
The charge for borrowing money and the amount paid for lending money
15
Average propensity to consume
The proportion of disposable income spent. It is consumer expenditure divided by disposable income
16
Net savers
People who save more than they borrow
17
Wealth
A stock of assets, e.g. property, shares and money held in a savings account
18
Distribution of income
How income is shared out between households in a country
19
Inflation
A sustained rise in the price level
20
Saving
Real disposable income minus spending
21
Average propensity to save
The proportion of disposable income saved. It is saving divided by disposable income
22
Target savers
People who save with a target figure in mind
23
Dissave
Spending more than disposable income
24
Savings ratio
Savings as a proportion of disposable income
25
Capacity utilisation
The extent to which firms are using their capital goods
26
Corporation tax
A tax on firms' profits
27
Retained profits
Profit kept by firms to finance investment
28
Unit cost
Average cost per unit of output
29
Real GDP
The country's output measured in constant prices and so adjusted for inflation
30
Gross Domestic Product
The total output of goods and services produced in a country within a specific time period
31
Exchange rate
The price of one currency in terms of another
32
Tariff
A tax on imports
33
Government bond
A financial asset issued by the central of local government as a means of borrowing money
34
Aggregate supply
The total amount that producers in an economy are willing and able to supply at a given price level in a given time period
35
Productivity
Output or production of a good or service per worker per unit of a factor of production in a given time period
36
Privatisation
Transfer of assets from the public to the private sector
37
Macroeconomic equilibrium
A situation where aggregate demand equals aggregate supply and real GDP is not changing
38
Circular flow of income
The movement of spending and income throughout the economy
39
Factor services
The services provided by the factors of production
40
Leakages
Withdrawals of possible spending from the secular flow of income
41
Injections
Additions of extra spending into the circular flow of income
42
Multiplier effect
The process by which any change in a component of aggregate demand results in a greater final change in real GDP
43
Overheating
The growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation
44
Output gap
The difference between an economy's actual and potential real GDP
45
Tend Growth
The expected increase in potential output over time
46
Economic Growth (Short Run)
An increase in real GDP
47
Economic Growth (Long Run)
An increase in the productive capacity, that is, in the maximum output that an economy can produce
48
Unemployment
A situation where people are out of work but are willing and able to work
49
Labour force
The people who are employed and unemployed, that is, those who are economically active
50
Elastic
Responsive to a change in market condition
51
Inflation Rate
The percentage increase in the price level over a period of time
52
Sustainable economic growth
economic growth that can continue over time and does not endanger future generations' ability to expand productive capacity
53
Tend Growth
The expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation
54
Full employment
A situation where those wanting and able to work can find employment at the going wage rate
55
Current account deficit
When more money is leaving the country than entering it, as result of sales of its exports, income and current transfers from abroad being less than imports and income and current transfers going abroad.
56
Hyperinflation
An inflation rate above 50%
57
Nominal GDP
Output measured in current prices and so not adjusted for inflation
58
Labour productivity
Output per worker hour
59
Informal economy
economic activity that is not recorded or registered with the authorities in order to avoid paying tax or complying with regulations, or because the activity is illegal
60
Economy of sale
The advantage of producing on large scarlet, in the form of lower long-run average cost
61
Unemployment rate
The percentage of the labour force who are out of work
62
Labour Force Survey
A measure of unemployment based on a survey using the ILO definition of unemployment
63
Claimant count
A measure of unemployment that includes those receiving unemployment-related benefits
64
Consumer Price Index
A measure of changes in the price of a representative basket of consumer goods and services.
65
Retail Price Index
measure of inflation that is used for adjusting pensions and other benefits to take account of changes in inflation and frequently used in wage negotiations
66
Cyclical unemployment
Unemployment arising from a lack of aggregate demand
67
Structural unemployment
Unemployment caused by the decline of certain industries and occupations due to changes in demand and supply
68
Frictional unemployment
Short term unemployment occurring when workers are in-between jobs.
69
Demand pull inflation
Increases in the price level caused by increases in aggregate demand
70
cost push inflation
Increases in the price level caused by increases in the costs of production
71
Hysteresis
Unemployment causing unemployment
72
Long-term unemployment
Unemployment lasting for more than a year
73
Menu costs
The costs of changing prices due to inflation
74
Shoeleather costs
Costs in terms of the extra time and effort involved in reducing money holdings
75
Inflationary noise
The distortion of price signals caused by inflation
76
Real interest rate
The nominal interest rate minus the inflation rate
77
Fiscal drag
People's income being dragged into higher tax bands as a result of tax brackets not being adjusted in line with inflation
78
Exchange rate
The price of one currency in terms of another currency or currencies
79
Fiscal policy
The taxation and spending decisions of a government
80
Monetary policy
Central bank and/or government decisions on the rate of interest, the money supply and the exchange rate
81
Supply side policies
Policies designed to increase aggregate supply by improving the efficiency of labour and product markets
82
reflationary
Of policy measures designed to increase aggregate demand
83
Deflationary
Of policy measures designed to reduce aggregate demand
84
Discretionary fiscal policy
Deliberate changes in government spending and taxation designed to influence aggregate demand.
85
Automatic stabilisers
Forms of government spending and taxation that change automatically to offset fluctuations in economic activity
86
Economic cycle
The tendency for economic activity to fluctuate outside its trend growth rate, moving from a high level of economic activity (boom) to negative economic growth (recession)
87
Progressive tax
A tax that takes a higher percentage from the income of the rich
88
Regressive tax
A tax that takes a greater percentage from the income of the poor
89
Recession
A fall In real GDP over a period of six months or more
90
Human capital
Education, training and experience that a worker, or group of workers , possesses.
91
Tariff
A tax on imports
92
Quota
A limit on imports
93
Occupational immobility of labour
Difficulty in moving from one type of job to another
94
Protectionism
The protection of domestic industries from foreign competition
95