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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

Voluntary export restraint

A limit placed on imports from a country with the agreement of that country's government