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Economics Definitions > Theme 2 – The UK Economy, Performance and Policies > Flashcards

Theme 2 – The UK Economy, Performance and Policies Flashcards

1
Q

Actual growth

A

Economic growth measured by changes in real GDP

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2
Q

Aggregate demand (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

Aggregate supply (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 payments

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 the business cycle, when growth is high

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7
Q

Budget deficit

A

When the government spends more money than it receives

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8
Q

Budget surplus

A

When the government receives more money than it spends

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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 the 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

Deflation

A

A persistent fall in prices of goods and services

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17
Q

Deflationary policy

A

Fiscal or monetary policy which is aimed at reducing AD

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18
Q

Demand pull inflation

A

Inflation caused by an increase in AD

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19
Q

Direct tax

A

Taxes paid straight to the government by the individual taxpayer

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20
Q

Disinflation

A

A reduction in the rate of inflation

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21
Q

Disposable income

A

The money consumers have left to spend, after taxes have been taken away and benefits added

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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 which are produced, measured by an increase in real GDP

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23
Q

Expansionary policy

A

Fiscal or monetary policy which is aimed at increasing AD

24
Q

Fiscal policy

A

The use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance

25
Q

Frictional unemployment

A

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

26
Q

Gross Domestic Product (GDP)

A

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

27
Q

GDP per capita

A

Total GDP divided by the population

28
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

29
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

30
Q

Indirect tax

A

Tax where the person charged with paying the money to the government is able to pass on the cost to someone else

31
Q

Inflation

A

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

32
Q

Injection

A

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

33
Q

Interventionist supply side policies

A

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

34
Q

Long run aggregate supply (LRAS)

A

The total output an economy can produce when operating at full output

35
Q

Marginal propensity to consume

A

The proportion of an increase in income spent on consumption
Change in consumption / change in income

36
Q

Marginal propensity to import

A

The proportion of an increase in income spent on imports

37
Q

Marginal propensity to save

A

The proportion of an increase in income that is saved

38
Q

Marginal propensity to tac

A

The proportion of an increase in income that is taken away in tac

39
Q

Monetary policy

A

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

40
Q

Monetary supply

A

Stock of money in the economy

41
Q

Multiplier

A

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

1 / (1-MPC) = 1 / MPW

42
Q

National expenditure

A

The value of spending by households on goods and services

43
Q

National income

A

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

44
Q

Net exports

A

Exports - imports

45
Q

Potential growth

A

A change in the productive potential of the economy

46
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

47
Q

Quantitative easing

A

When the central banks buy assets in exchange for money in an attempt to increase the money supply

48
Q

Real GDP

A

GDP which strips out the effect of inflation

49
Q

Recession

A

The trough of the business cycle, when growth is low

50
Q

Seasonal unemployment

A

Unemployment cause when an industry only operates during certain times of they year

51
Q

Short run aggregate supply (SRAS)

A

Aggregate supply when at least one factor of production is fixed

52
Q

Short run Phillips curve

A

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

53
Q

Structural unemployment

A

Unemployment caused by the long-term decline of an industry

54
Q

Supply-side policies

A

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

55
Q

Total GDP

A

The GDP of the whole country

Economics Definitions (6 decks)

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