Negative economic growth over two successive quarters
1 of 129
Economic growth
An increase in the real output of the economy.
2 of 129
Long-term growth rate
the average rate of econ growth sustained over a period of time
3 of 129
Real GDP per capita
total output of the economy in a year, divided by the population, adjusted for inflation
4 of 129
Diagram showing the max. combination that can be produced given max productive efficiency.
5 of 129
Actual growth
an increase in the productive potential of the economy matched by an increase in demand
6 of 129
Potential growth
an increase in the productive potential of the economy, not necessarily matched by demand
7 of 129
output gap
the difference between actual and potential growth.
8 of 129
Trend rate of econ. growth
the long run average increase in GDP
9 of 129
economic cycle
the cycle pattern of short term fluctuations in gdp from year to year
10 of 129
Supply side policies
a range of measures designed to increase AS
11 of 129
Participation rate
the proportion of a population of working age in a job or actuvely seeking work
12 of 129
occupational immobility
the difficulties faced by workers wishing to change occupations due to not having the required skills or qualifications
13 of 129
Labour productivity
output per worker per hour
14 of 129
GDP plus net property income from abroad
15 of 129
Output produced in the UK, plus net property income from abroad, minus depreciation of the nation's capital equipment.
16 of 129
valuable economic activity where no money changes hands
17 of 129
Purchasing power parity
exchange rates that take into account how much a typical basket of goods in one country costs compared to another
18 of 129
a measure of economic welfare based on the average of 3 indicators - standard of living, life expectancy and educational attainment
19 of 129
a measure of econ welfare based on 4 basic dimensions of human life - longevity, knowledge, econ provisionin and social inclusion
20 of 129
Measure of domestic progress
a measure of economic welfare designed to reflect progress in life and towards a sustainable economy by factoring in the social and environmental costs of grwoth, and benefits of unpaid work such as household labour.
21 of 129
Misery index
a measure of econ. welfare constructed by adding unemployment rate to inflation rate
22 of 129
Sustainability (of growth)
econ. growth which does not impose costs on future generations
23 of 129
Balance of payments
a record of the financial transactions over a period of time between a country and its trading partners
24 of 129
inventory investment/ stock-building
investment by firms in stocks of raw materials and stocks of finished goods ready to be sold
25 of 129
the headline measure of inflation, derived from movements in a weighted basket of consumer goods over a 12-month period
26 of 129
Living costs and food survey
a representative monthly survey of UK household expenditure used to derive changes in CPI
27 of 129
Indirect taxes
tax levied on spending on g/s
28 of 129
wage-price spiral
the process whereby increases in costs, such as wages, lead to increases in prices, which in turn lead to firms' costs increasing and so on
29 of 129
quantity theory of money
the theory that increases in money supply will lead to increases in price level
30 of 129
velocity of circulation
the no. of times the money supply changes hands in a year
31 of 129
very large, rapid increases in the general price level
32 of 129
Anticipated inflation
where economic agents correctly predict the future rate of inflation
33 of 129
Unanticipated inflation
where economic agents do not accurately predict the future rate of inflation
34 of 129
Shoe-leather costs
the time and money spent 'shopping around' by consumers to find the best deals when prices are rising throughout the economy
35 of 129
fiscal drag
increases in the burden of taxation, when tax allowances are not increased in line with inflation
36 of 129
money illusion
when economic agents fail to realise that changes in money values are not the same as changes in real values
37 of 129
Benign deflation
falling prices resulting from tech advances across the country
38 of 129
Malevolent deflation
falling prices resulting from a significant downturn in the economy
39 of 129
equilbrium unemployment
when AD for labour = AS
40 of 129
geographical immobility
the inability of a factor of production to move to where jobs exist
41 of 129
replacement ratio
unemployment benefits divided by the income an unemployed worker could receive if in work.
42 of 129
Casual unemployment
kind of frictional unemployment when workers are laid off on short term basis.
43 of 129
Seasonal unemployment
casual unemployment resulting from seasonal fluctuations in demand.
44 of 129
fall in proportion of national output accounted by the maunfactuing sector of the economy
45 of 129
Technological unemployment
unemployment due to introduction of labour-saving technology.
46 of 129
Involuntary unemployment
when a worker is willing to accept a job at the going wage rate but is not offered one.
47 of 129
Classical or real-wage
results from real wages being above their market-clearing level, creating an excess supply of labour.
48 of 129
Natural rate of unemployment
unemployment that exists when aggregate demand for labour equals aggregate supply, that is voluntary, frictional unemployment.
49 of 129
tendency for a variable not to return to its original value or state when changed; eg unemployment can lead to higher unempoyment.
50 of 129
Phillips curve
economic model that shows a trade-ff between inflation and unemployment.
51 of 129
coexistence of high levels of inflation and unempoyment.
52 of 129
Adaptive expectations
Where decisions about the future are based upon past information.
53 of 129
non-accelerating inflation rate of unemployment, that is, the level of unemployment at which there is no tendency for inflation to accelerate.
54 of 129
world wide growth of multinational companies, international integration, the spread of free markets and policies of liberalisation and free trade,
55 of 129
Direct taxes
taxes levied directly on the income of an individual or organisation.
56 of 129
Canons of taxation
the characteristics of a good tax, after adam smith
57 of 129
Principles of taxation
a modern list of characteristics of a good tax system
58 of 129
horizontal equity
when people or firms with the same income and financial circumstances pay the same amount of tax
59 of 129
vertical equity
when the amount that people and firm pay is based on their ability to pay
60 of 129
when taxes are earmarked for a specific purpose
61 of 129
benefit principle
the argument that taxes should be linked to the benefits received by taxpayers
62 of 129
The Budget
The govts annual announcement of changes to its planned levels of spending and taxation
63 of 129
Progressive tax
where the proportion of a persons income paid in tax increases as income increases
64 of 129
regressive tax
where the proportion paid in tax falls as income increases
65 of 129
Proportional tax
where the proportion of income paid in tax stays the same as income increases
66 of 129
Fiscal stance
whether the govt is seeking to increase/ decrease AD using fiscal policy
67 of 129
Neutral fiscal stance
where the govt runs a balanced budget
68 of 129
Demand management
use of macroeconomic policy to manipulate the level of AD in the economy
69 of 129
cyclical budget deficit
a deficit resulting from fluctuations in the economic cycle
70 of 129
Automatic stabilisers
features of govt spending/ taxation that minimise econ fluctuations
71 of 129
structural budget deficit
a deficit resulting from fundamental changes in the structure of the economy
72 of 129
Public sector net cash requirement
the difference between govt spending and revenue
73 of 129
netional debt
borrowings of the govt over successive years
74 of 129
crowding out
where a public sector deficit deters private sector investment and consumption
75 of 129
Golden rule
The UK govts fiscal rule that net govt borrowing should only be to fund infrastructure projects
76 of 129
sustainable investment rule
over the econ cycle, public sector debt should not exceed 40% of gdp
77 of 129
'stealth' taxes
a negative term coined by govt critics to describe taxes designed to go unnoticed
78 of 129
investments in the domestic economy in new manufacturing plants by foreign multinational companies
79 of 129
Laffer curve
a model that shows the theoretical relationship between tax rates and tax revenue
80 of 129
'welfare to work'
a series of politicies designed to increase incentives to gain employment
81 of 129
the degree to which financial assets can be easily converted into money
82 of 129
Base rate
the interest rate a bank sets to determine its lending and borrowing rates. It will tend to offer interest rates below the base rate to savers, whilst charging rates above the base rate for borrowers
83 of 129
Monetary base control and reserve asset ratios
Restrictions imposed by the BOE on the ability of high street banks to supply credit and bank deposits
84 of 129
Open Market Operations (OMOs)
the buying and selling of govt bonds in exchange for money to either increase/ decrease the money supply
85 of 129
the countries in the EU that have adopted the Euro
86 of 129
Transmission mechanism of monetary policy
the process by which a change in interest rates affects AD and inflation
87 of 129
products beyond the raw material stage that are used in the production of finished goods e.g. stones and metals
88 of 129
Absolute advantage
where a country using a given resource input is able to produce more than other countries with the same input
89 of 129
Comparative advantage
The oc of producing the good is less in a country than elswhere
90 of 129
Ricardian theory
By David Ricardo - outlines the theory of comparative advantage
91 of 129
strategic value
of extreme importance to a country - may be required during wars e.g armaments
92 of 129
trade embargoes
prohibition of the export and import of certain types of products
93 of 129
Marshall-Lerner condition
Devaluation or depreciation of a currency will lead to an overall improvement in the current account as long as the combined price elasticities of demand or exports and imports exceed one.
94 of 129
Specific tax
a tax levied at a fixed rate per unit
95 of 129
a tax which is a % of the price of the unit
96 of 129
Current account
the part of the balance of payments that primarily records trade in g/s
97 of 129
capital and financial account
records capital flows in/ out of the country
98 of 129
Balance of trade in goods
visible exports - visible imports
99 of 129
balance of trade in services
invisible exports - invisible imports
100 of 129
net income flows
the difference between inward and outward flows of interest, profits and dividends.
101 of 129
net current transfers
mainly govt transfers to and from overseas organisations
102 of 129
direct investment
the aquisition of productive assets e.g. factories and offices
103 of 129
portfolio investment
the aquisition of financial assets e.g. shares
104 of 129
expenditure-reducing policies
policies used to correct current account imbalances by reduces consumer spending power
105 of 129
Expenditure-switching policies
policies used to correct current account imbalances by encouraging consumers to purchase domestically produced output rather than imports
106 of 129
marginal propensity to import
the proportion of an increase in income spent on imports
107 of 129
direct control
controls on imports such as tariffs and quotas
108 of 129
reducing the value of a currency in a fixed or semi-fixed exchange rate system
109 of 129
in relation to currencies, reducing the value of a currency in a free-floating exchange rate system
110 of 129
J-curve effect
in the ST, a devaluation/ depreciation will lead to a deterioration of the current account before it starts to improve.
111 of 129
increasing the value of a currency in a fixed or semi-fixed exchange rate system
112 of 129
increasing the value of a currency in a free-floating exchange rate system
113 of 129
exchange controls
restrictions on the ability to trade foreign currencies to a country's central bank
114 of 129
Adjustable peg
value of the fixed exchange rate can be changed as circumstances require
115 of 129
crawling peg
frequent changes in the value of a fixed exchange rate
116 of 129
a multinational institution set up in 1947 to operate the adjustable peg exchange rate system
117 of 129
dirty float
manipulation of a floating rate to gain advantages over trading partners
118 of 129
The Euro
the currency adopted by the member of the Economic and Monetary Union (EMU)
119 of 129
Single market
removal of obstacles such as customs checking, to allow the free movement of g/s, capital and persons through the area
120 of 129
a group of countries that have adopted the euro and have their monetary policy controlled by the ECB
121 of 129
Trade deflection
redirection of international trade due to the formation of a free trade area
122 of 129
rules of origin
stipulation that a product must be manufactured from locally sourced components
123 of 129
intra-area trade
trade between the members of a trading agreement
124 of 129
trade creation
an increase in international trade that results from a decrease in tariff barriers
125 of 129
social dumping
where goods are produced by a low wage labour usually without expense by employers on workers' social benefits
126 of 129
Anglo-saxon neo-liberalisation
economic reform aimed at boosting the dynamism of economies - in contrast to the social model which stresses social objectives
127 of 129
FOREX market
abbreviation of foreign exchange markets
128 of 129
high unemployment and slow job creation despite econ. growth
129 of 129

Other cards in this set

Card 2


An increase in the real output of the economy.


Economic growth

Card 3


the average rate of econ growth sustained over a period of time


Preview of the back of card 3

Card 4


total output of the economy in a year, divided by the population, adjusted for inflation


Preview of the back of card 4

Card 5


Diagram showing the max. combination that can be produced given max productive efficiency.


Preview of the back of card 5
View more cards


No comments have yet been made

Similar Economics resources:

See all Economics resources »See all Macroeconomic indicators resources »