unit 6 key words

Question 1

macroeconomics

Answer 1

study of the economy as a whole at the aggregate level

Question 2

policy objective

Answer 2

target / goal

policy makers aim to hit

Question 3

short- run economics growth

Answer 3

real output resulting from using idle resources

including: labour

Question 4

long run economic growth

Answer 4

increase in level of potential real output level

outward shift of economy PPF

Question 5

gross domestic product (GDP)

Answer 5

sum of all goods and services

or level of economic output / time

Question 6

real gross domestic product (RGDP)

Answer 6

sum of all good and services

adjusted to the price level of inflation

Question 7

nominal GDP

Answer 7

reflects total output of the economy
measured at the current market prices
(without removing the effects of inflation)

Question 8

recession

Answer 8

fall in RGDP for 6 months or more

Question 9

full employment

Answer 9

Beveridge’s definition:
3% or less of the labour force unemployed

free market definition:
level of employment occuringat the market clearing wage rate
(N.o workers wanted = workers supplied)

Question 10

claimant amount

Answer 10

method of measuring unemployment
according to those who claim unemployment benefits
i.e. job seekers allowance

Question 11

labour force survey

Answer 11

quarterly sample survey of UK households

provide information on labour market

Question 12

inflation

Answer 12

rise in economy price level

Question 13

deflation

Answer 13

decrease of economy price level

Question 14

disinflation

Answer 14

decrease of the rate of inflation

Question 15

price index

Answer 15

index number
shows extent to which a price/prices have changed / time
compared to base year

Question 16

consumer price index (CPI)

Answer 16

calculate rate of consumer price inflation in UK
AVG price increase on basket of 700 consumer goods / services
(current method used)

Question 17

retail prices index (RPI)

Answer 17

calculate rate of consumer price inflation
(old method)
currently used for uprating (each year) cost of TV and motor vehicle licenses with taxes on alcohol etc

Question 18

indexation

Answer 18

automatic adjustment of pensions, welfare benefits to changes in the price level
through use of price index

Question 19

balance of payments

Answer 19

record of all currency flows in & out of a country / time

Question 20

current account of the balance of payments

Answer 20

measures all currency flows in & out a country / time

in payment for imports & exports - together with income & transfer flows

Question 21

exports

Answer 21

domestically produced goods & services sold to residents of other countries

Question 22

imports

Answer 22

goods or services produced in other countries and sold to residents of this country

Question 23

balance of trade

Answer 23

exports - imports

value

Question 24

balance of trade deficit

Answer 24

imports > exports

value

Question 25

balance of trade surplus

Answer 25

exports > imports

value

Question 26

policy conflict

Answer 26

2 policy objectives cannot both be achieved at once

better achievement one leads to worse performances of the other

Question 27

trade-off between policy objectives

Answer 27

choosing an acceptable balance of  opposing objectives 
ie inflation  (2%) and unemployment (4%)

Question 28

Keynesian economists

Answer 28

follow John Maynard Keynes

belief that governments should manage the economy through fiscal policy

Question 29

pro-free market economists

Answer 29

(opponents of Keynes)
dislike government intervention in the economy
prefer operation of free market

Question 30

monetary policy

Answer 30

used by government and back of England

interest rates and other monetary instruments to achieve policy objectives

Question 31

fiscal policy

Answer 31

used by government

G spending and tax to achieve policy objectives

Question 32

performance indicator

Answer 32

provides information for judging success or failure of G policy
ie fiscal or monetary

Question 33

index number

Answer 33

number used as an index
ie consumer price index
make comparisons / time