even when there is some unemployment there may be shorages of people who are available for work and have he skills that are required
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what are supply constraints?
includes skill shortages but also other constraints such as overloaded infrastructure
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full capacity output?
is the maximum level to which aggregate suply can grow
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what is accelerating inflation?
it occurs when the economy is nearing full capacity output.
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what is the multiplier ?
It represents the size of the chnage in the level of economic activity in relation to original change in the level of expenditure.
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What is unsustainable economic growth?
it occurs when rising aggregate demand leads to accelerating inflation
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What is the fiscal policy?
it refers to the use of taxaion to provide public services - used to stimulate the economy or to slow the rate of economic groeth.
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What are bonds?
may be issued by the central bank to raise fund for governments
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wat is quantitative easing?
it is unconventional monetary policy aiming to stimulate bank lending paying banks for cash bonds.
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what are supply side policies?
include all measures tha ca increase the total productie capacity of the economy
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what are market-based policies?
work on the principle that the free markets can deliver both productive and alloctaive efficiency
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what is the interventionist policies?
influences and control market forces in order to correct for market failure and imperfect competition
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what is the poverty trap?
becomes a problem when disposable income is lower than the benefit rate
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what are tax credits?
the working families tax credit is generally known now, creates an incentive to work by ensuring that everyone is better off in work
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what are automatic stabilisers?
reduc the fluctuations of the economic cycle without requiring a change in fiscal policy
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what are shocks?
they are unexpected or unpredictable events hat have a major effect on the national economy
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what is uncertainty?
it refers to any possible chnage that isn't predictable
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what are risks?
arise when changes are exected
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what are forward markets?
make it possible to buy foreign currencies at a price agreed today for delivery on a expected date.
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what is credit ceation?
it is the process by which banks expand their lending by a multiple of the deposits they receive
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what are financial intermediaries?
include all organisations that take savers funds and just lend to investors.
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what are liquid assets?
are assets that can be very easily be sold for cash.
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what is light touch regulation ?
it involves fewer rules and more reliance on banks and businesses to control their own actions in prudent ways
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what are bank failures?
they occur when the bank doesnt have enough cash to allow all depositors who want to retreive their money to do so.
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what are the lenders of last resort?
it is an important function of central banks - guarantee to lend banks that are temporarily unable to meet customkers needs
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what are sub-prime mortgages?
they are loans for house purchase to people who have low credit ratings
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what arebank failure?
it refers to the situation in which the bank can no longer borrow enough to cover all of its debts
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what are moral hazard?
it occurs when individuals or organisations can act in their own interests knowing that other people or organisations will have to deal with their problems if they arise
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Other cards in this set
Card 2
Front
what are supply constraints?
Back
includes skill shortages but also other constraints such as overloaded infrastructure
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