Vocab unit 2

Question 1

Imports

Answer 1

Goods and services purchased from abroad

Question 2

Inflation

Answer 2

A persistent increase in the level of prices

Question 3

Injections

Answer 3

Money that originates outside the circular flow and so will increase national income/output/expenditure

Question 4

Interest rates

Answer 4

The cost of borrowing or reward of savings

Question 5

Investment

Answer 5

Investment is spending by firms in buildings, machinery and improving the skills of the labour force

Question 6

Withdrawals

Answer 6

Any money not passed on in the circular flow and has the effect or reducing national income/output/expenditure

Question 7

Unemployment

Answer 7

Those without a job but who are seeking work at current wage rates

Question 8

The Euro Zone

Answer 8

The countries that have adopted the euro as their sole currency

Question 9

Balance of payments deficit

Answer 9

More is imported than exported

Question 10

Circular flow

Answer 10

A model to show the circulation of income between consumers and producers

Question 11

Consumer spending

Answer 11

The money spent by people after tax has been taken by the government

Question 12

Economic growth

Answer 12

The capacity of an economy to produce more goods and services over time

Question 13

Economic systems

Answer 13

Economic systems are the organisations that guide the economy of the commodity

Question 14

Floating Exchange Rate

Answer 14

An exchange rate where a countries currency is allowed to fluctuate according to the foreign exchange markets

Question 15

Government spending

Answer 15

The money spent by the government on public services such as defence and health (1=benefits 2=NHS)

Question 16

Government revenue

Answer 16

The money received by government through taxes (1=income 2=VAT 3= Corporation tax)

Question 17

GDP/GNP

Answer 17

The entire income of a country

Question 18

Exports

Answer 18

Good and services sold abroad

Question 19

Equilibrium

Answer 19

The price at which demand is equal to supply and there are no tendencies to change

Question 20

Fixed Exchange Rate

Answer 20

An exchange rate where one currency is linked to that of other countries

Question 21

Fiscal policy

Answer 21

The policy of the government regarding taxation and government expenditure

Question 22

Externalities

Answer 22

Costs or benefits that spill over to third parties external to a market transaction

Question 23

Exchange rates

Answer 23

The price at which one currency can be exchanged for another

Question 24

Balance of payments spending

Answer 24

More is exported than imported

Question 25

Balance of payments equilibrium

Answer 25

A country is importing the same amount of goods as it is exporting

Question 26

Budget surplus

Answer 26

Where government receipts exceed government spending in a financial year

Question 27

Budget deficit

Answer 27

Where government spending exceeds government receipts in a financial year

Question 28

Balance of payments

Answer 28

Exports minus imports. A record of all financial transactions

Question 29

Positive multiplier effect

Answer 29

Positive multiplier effect is where an increase in consumer spending leads to a larger than proportionate change in the national income for positive results (profit)

Question 30

Privatisation

Answer 30

Sale of government owned assets to the private sector

Question 31

Public sector

Answer 31

Part of a state where either production, delivery or services are run by the government

Question 32

RPI

Answer 32

A measure of the price level that excludes payments to services, mortgages and interest

Question 33

Saving

Answer 33

Saving is a withdrawal from the circular flow. It is income not spent

Question 34

The Euro

Answer 34

The currency of the eurozone

Question 35

Negative multiplier effect

Answer 35

Negative multiplier effect is where a decrease in consumer spending leads to a larger than proportionate change in the national income for positive results (fall in profit)

Question 36

National income

Answer 36

The value of all products and services produced in a country together with income from other countries

Question 37

Monetary Policy Committee

Answer 37

A committee of economists and central bankers who meet monthly and decide whether or not to change the bank rate

Question 38

Macro Economic Aims

Answer 38

The aims of macroeconomic policy is to gain high employment, price stability, economic growth and balance of payments equilibrium

Question 39

Market failures

Answer 39

Where the market fails to produce what consumers requires at the lowest possible cost

Question 40

Market system

Answer 40

The market system allocated goods by price

Question 41

Mixed economy

Answer 41

An economic system where both the state and the private sector contribute to the economy

Question 42

Monetary Policy

Answer 42

Controlling the macroeconomy via change in monetary variables such as the money supply or interest rates