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Economics a level > THEME 2 > Flashcards

THEME 2 Flashcards

definitions

1
Q

Actual growth

A

economic growth measured by changes in real GDP

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2
Q

AD

A

the total level of demand in an economy at any given price at a moment in time

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3
Q

AS

A

The total amount of output in the economy at any given price at a moment in time

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4
Q

animal spirits

A

the level of confidence of business owners

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5
Q

Balance of payment

A

a record of all financial dealings over a period of time between economic agents of one country and another

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6
Q

boom

A

the peak of business cycle, when growth is high

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7
Q

budget deficit

A

when the gov spends more than it receives

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8
Q

budget surplus

A

when the gov spends less than what they receive

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9
Q

circular flow

A

a model of the economy which shows the flow of goods and services, the factors of production and money around the economy

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10
Q

claimant count

A

A measure of unemployment; the number of people receiving benefits for being unemployed

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11
Q

consumer price index (CPI)

A

official measure used to calculate the rate of inflation, using a weighted basket of goods

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12
Q

cost push inflation

A

inflation caused by a decrease in AS

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13
Q

current account

A

a record of payments for the purchase and sale of goods and services, as well as income and transfers

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14
Q

current account deficit

A

when more money leaves the country than enters, so the current account is negative

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15
Q

current account surplus

A

when more money enters the country than leaves, so the current account is positive

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16
Q

cyclical unemployment

A

unemployment caused by a lack of AD

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17
Q

deflation

A

a persistent fall in prices of goods and services

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18
Q

deflationary policy

A

fiscal or monetary policy which is aimed at reducing AD

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19
Q

demand pull inflation

A

inflation caused by an increase in AD

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20
Q

direct tax

A

taxes paid straight to the gov by the individual tax payer

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21
Q

disinflation

A

a reduction in the rate of inflation

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22
Q

economic growth

A

an increase in the long term productive potential in the economy; an increase in the amount of goods and services produced, measured by an increase in real GDP

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23
Q

expansionary policy

A

fiscal or monetary policy which is aimed to increase AD

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24
Q

export-led growth

A

economic growth arising from an increase in exports

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25
Q

fiscal policy

A

the use of burrowing, gov spending and taxation to manipulate the level of AD and improve macro performance

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26
Q

frictional unemployment

A

unemployment caused when people move between jobs and enter the job market

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27
Q

gross domestic product

A

GDP - the value of goods and services produced in a country over a given period of time

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28
Q

gross investment

A

investment both to replace old machinery that has depreciated and to create/buy new ones

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29
Q

gross national income

A

GNI - the value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends

30
Q

Gross national product (GNP)

A

the value of goods and services produced by citizens of a country whether they live in the country or not

31
Q

Inactive

A

Those neither employed nor unemployed; those not participating in the job market

32
Q

Indirect tax

A

tax where the person charged with paying the money to the gov is able to pass on the cost to someone else

33
Q

Inflation

A

A rise in prices of goods and services that erodes the purchasing power of money

34
Q

Injection

A

spending power entering the circular flow of income resulting from investment, gov spending and exports

35
Q

Interventionist supply side policies

A

Policies designed to correct market failure, where the gov intervenes in the market

36
Q

Labour force survey

A

A measure of unemployment which surveys people to class them as unemployed, employed or inactive under the international labour organisation (ILO) definitions

37
Q

Long run aggregate supply

A

total output an economy can produce when operating at full output

38
Q

long run trend growth rate

A

the average sustainable rate of econ growth over a period of time

39
Q

marginal propensity to consume

A

the proportion of an increase in income spent on consumption. change in consumption/change in income

40
Q

Marginal propensity to import

A

the proportion of an increase in income spent on imports

41
Q

Marginal propensity to save

A

the proportion of an increase in income that is saved

42
Q

Marginal propensity to tax

A

the proportion of an increase in income that is taken away in tax

43
Q

Marginal propensity to withdraw

A

the proportion of an increase in income that is withdrawn from the circular flow

44
Q

market-based supply-side policies

A

policies which are designed to remove anything which prevents the free market system working efficiently

45
Q

Monetary policy

A

the attempts of the central bank/regulatory authority to control the level of AD by altering the base interest rates or the amount of money in the economy

46
Q

Multiplier

A

an increase in injection will lead to an even greater increase of national income

47
Q

National expenditure

A

the value of spending by households on goods and services

48
Q

National income

A

the value of income paid by firms to households in return for land, labour, capital and enterprise

49
Q

National output

A

the value of the flow of goods and services from firms to households

50
Q

Negative output gap

A

when GDP is lower than predicted; the economy is producing below full output

51
Q

Nominal GDP

A

GDP which does not take inflation into account; GDP at current prices

52
Q

Output gap

A

the differences between the long term trend rate of growth and actual growth

53
Q

Positive output gap

A

when GDP is higher than predicted; the economy is producing above the full output

54
Q

Potential growth

A

A change in the productive potential of the economy

55
Q

Purchasing power parity

A

PPP - Exchange rate of one currency to another that compares the cost of living in different countries through comparing a typical basket of goods

56
Q

Quantitative easing

A

When the central bank buys assets in exchange for money in an attempt to increase the money supply

57
Q

Real wage unemployment

A

Unemployment caused when wages are set above the equilibrium wage rate

58
Q

Recession

A

The trough of the business cycle, when growth is low. The gov defines it as where real GDP falls in at least two successive quarters

59
Q

Retail price index

A

RPI - an old measure of inflation which has lost it national statistic status

60
Q

Seasonal unemployment

A

Unemployment caused when an industry only operates during certain times of the year

61
Q

Short run Aggregate supply

A

SRAS - Aggregate supply when at least one factor of production is fixed

62
Q

Short run Phillips curve

A

shows the relationship between unemployment and inflation: higher levels of unemployment lead to lower levels of inflation

63
Q

Structural unemployment

A

Unemployment caused by the long-term decline of an industry

64
Q

Supply-side policies

A

Gov policies aimed at increasing the productive potential of the economy and shifting LRAS to the right

65
Q

Trade (business) cycle

A

The tendency of economic growth to rise and fall above and below the trend rate of econ growth, causing boom and busts

66
Q

Underemployment

A

Those who are working part time, on zero contract or on gov training schemes but would prefer to work full time

67
Q

Unemployed

A

Those who are without work, able to start work in next two weeks and have actively sought work for the last four weeks

68
Q

Value of GDP

A

Nominal values of GDP; GDP at current prices

69
Q

Volume of GDP

A

Real values of GDP; the size of the basket of goods

70
Q

Wealth

A

A stock of assets

71
Q

Withdrawal

A

spending power leaving the circular flow of income resulting from savings, taxation and imports

Economics a level (3 decks)

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