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Economics Revision Hard > Theme 2 Definitions > Flashcards

Theme 2 Definitions Flashcards

1
Q

Actual growth

A

economic growth by changes in real GDP

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2
Q

Aggregate demand

A

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

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3
Q

Aggregate supply

A

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

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4
Q

Animal spirits

A

The level of confidence in business owners (keynes)

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5
Q

Balance of payments

A

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

a record of all international transactions between economies, consisting of the financial, current and capital account

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6
Q

Base year

A

A year chosen as a good comparison is series of data when building an index; it is automatically given an index figure of 100

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7
Q

Boom

A

The peak of the trade cycle when growth is high

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8
Q

budget

A

where the government lays out their spending and taxation plan

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9
Q

budget deficit

A

when the government’s spending is higher than their tax revenue

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10
Q

budget surplus

A

When the government’s revenue is higher than their spending

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11
Q

Circular flow of income

A

A model of the economy that shows the flow of goods and services, the factors of production and money around the economy

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12
Q

claimant count

A

a measure of unemployment through the number of people receiving benefits for being unemployed every month

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13
Q

consumer price index

A

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

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14
Q

consumption

A

consumer spending on goods and services

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15
Q

cost push inflation

A

inflation caused by a decrease in AS

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16
Q

current account

A

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

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17
Q

current account deficit

A

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

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18
Q

current account surplus

A

when more money enters the country than leaves, it is positive

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19
Q

cyclical unemployment

A

Unemployment caused by the fluctuating nature of the trade cycle which is influenced by the levels of AD

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20
Q

deflation

A

a persistent fall in the prices of goods and services

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21
Q

deflationary policy

A

fiscal or monetary policies which is aimed to reduce AD (contractionary)

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22
Q

demand pull inflation

A

Inflation caused by an increase in AD

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23
Q

depreciation (capital)

A

The reduction in the value of machinery over time

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24
Q

depreciation

A

a fall in the value of the currency in a free floating exchange rate system

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25
Q

direct tax

A

taxes paid straight to the government by individual tax payers

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26
Q

disinflation

A

a reduction in the rate of inflation

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27
Q

disposable income

A

the money consumers have to spend, after taxes have been taken and benefits have been added

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28
Q

economic growth

A

an increase in the long run productive capacity in an economy

shows an increase in amount of goods produced

measured by an increase in GDP

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29
Q

employed

A

someone who does more than 1 hour of paid work a week

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30
Q

expansionary policies

A

fiscal or monetary policy which is aimed at increasing AD

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31
Q

exports

A

goods or services sold to foreigners that bring income into the country

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32
Q

export-led growth

A

economic growth arising from an increase in exports

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33
Q

fiscal policy

A

the use of borrowing. government spending and taxation to manipulate the levels of AD and improve macroeconomic performance

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34
Q

frictional unemployment

A

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

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35
Q

gross domestic product (GDP)

A

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

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36
Q

GDP per capita

A

total GDP divided by the population

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37
Q

gross investment

A

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

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38
Q

Gross National income (GNI)

A

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

39
Q

Gross National Product

A

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

40
Q

government spending

A

spending by the government for the provision of goods and services

41
Q

imports

A

goods and services bought from foreigners that takes income out of a country

42
Q

inactive

A

those neither employed or unemployed; not participating the job market

43
Q

income

A

a flow of assets

44
Q

index number

A

number allowing accurate comparisons over time to be made. The base year value is typically 100

45
Q

indirect tax

A

levy on expenditure

46
Q

inflation

A

a general and sustained increase in prices
That erodes the purchasing power of money

47
Q

injection

A

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

48
Q

interventionist supply side policies

A

policies designed to correct market failure where the government intervenes with the market

49
Q

investment

A

spending by businesses on capital goods, which leads to the creation of real goods

50
Q

Labour force survey

A

a measure of unemployment which surveys people to class them as unemployed, employed or inactive under the ILO definitions

51
Q

living standards

A

the quality of life enjoyed by people in a country

52
Q

long run

A

when all factors of production are variable

53
Q

LRAS

A

the total output of an economy when producing at full output

54
Q

long run trend growth rate

A

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

55
Q

marginal propensity to consume

A

the proportion of an increase in income spend on consumption

change in consumption/change in income

56
Q

MPM

A

the proportion of an increase in income spend on imports

57
Q

MPS

A

the proportion of an increase in income that is saved

58
Q

MPT

A

the proportion of an increase in income taken away in tax

59
Q

market-based supply side policies

A

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

60
Q

monetary policies

A

measures made by central banks to control levels of AD due to changes in IR, ER and money supply

61
Q

Monetary policy committee

A

9 economists who meet monthly to set the bank rate as well as other monetary instruments

62
Q

monetary supply

A

stock of money in the economy

63
Q

multiplier

A

an increase in injection/withdrawals would lead to even greater change in national income

1/1-mpc or 1/mpw

64
Q

national expenditure

A

the value of spending by households on goods and services

65
Q

National income

A

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

66
Q

national output

A

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

67
Q

negative output gap

A

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

trend rate growth > actual growth

68
Q

net trade

A

exports minus imports

69
Q

net investment

A

investment adjusted for depreciation; gross investment minus depreciation

70
Q

nominal gdp

A

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

71
Q

output gap

A

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

72
Q

positive output gap

A

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

73
Q

potential growth

A

a change in the productive potential of an economy

74
Q

purchasing power parity

A

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

75
Q

quantitative easing

A

when the central bank print electronically money to buy assets in exchange in an attempt to increase the money supply as investors may choose to save due to higher yield leading to higher deposits and increase loans given by banks

76
Q

real gdp

A

GDP that takes into account inflation

77
Q

real wage unemployment

A

unemployment caused when wages are set above equilibrium wage rate

78
Q

recession

A

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

79
Q

RPI (retail price index)

A

The old measure of inflation which has lost its national statistic status

80
Q

savings

A

the decision by consumers to postpone consumption

81
Q

seasonal uneployment

A

unemployment caused when an industry only operates during certain time of the year

82
Q

short run

A

when at least one factor of production is fixed

83
Q

SRAS

A

AS when at least one of the factors of production is fixed

84
Q

Short run Philips curve

A

Shows the relationship between unemployment and inflation; higher levels of unemployment lead to lower levels of inflation

85
Q

structural unemployment

A

unemployment caused by the long term decline of an industry

86
Q

supply side policies

A

government policies aimed at increasing the productive potential of the economy by shifting LRAS to the right

This is done by increase the quality or quantity of factors of production

87
Q

total GDP

A

the GDP of the whole country

88
Q

trade cycle

A

the tendency of economic growth to rise and fall above and below the trend rate of economic growth, causing booms and recessions

89
Q

underemployment

A

Those who are working part time, on zero hour contracts or those employed in areas under their skill level

90
Q

unemployed

A

those who are without work, able to start work in the next 2 weeks and have actively sought work for the last 4 weeks and have been unemployed for the last 4 weeks

91
Q

value of gdp

A

nominal values of GDP; GDP at current prices

92
Q

volume of gdp

A

real values of GDP; the size of basket of goods

93
Q

wealth

A

a stock of assets

94
Q

withdrawals

A

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

Economics Revision Hard (17 decks)

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