F583 - The global economy

HideShow resource information
  • Created by: faatimah
  • Created on: 01-04-14 09:46
Real GDP growth
a measure of the total output, expenditure or income of an economy after adjusting for changes in the price level. Growth of real GDP is % change in output during a particular time period, often measured over a year
1 of 46
Inflation
sustained increase in the general price level, measure in the UK by changes in the cost of a basket of goods and services bought by a typical household (CPI), weighted according to expenditure on each item in the basket
2 of 46
Unemployment
someone is out of work but actively seeking employment. Measured as the total number of people unemployed/% of the workforce
3 of 46
Balance of payments
records money flows into and out of a country over a period of time
4 of 46
Current account
includes money flows due to trade, transfers of inters, profit and dividends and transfers of money by governments and international organisations
5 of 46
Standard of living
a measure of the material well-being of a nation and its people
6 of 46
Short-run economic growth
the actual annual percentage increase in an economy's output, sometimes referred to as actual economic growth
7 of 46
Long-run economic growth
the rate at which the economy's potential output could grow as a result of changes in the economy's capacity to produce goods and services, sometimes referred to as potential economic growth
8 of 46
Output gap
difference between actual and potential output of an economy. A situation where actual output is below potential output = negative output. Positive output gap = short-term, actual output exceeds economy's potential output
9 of 46
Spare capacity
exists when firms in the economy are capable of producing more output than they are actually producing
10 of 46
Trend rate of growth
the average rate of economic growth measured over a period of time, normally over the course of the economic cycle
11 of 46
Short-run aggregate supply
shows the level of production for the economy at a given price level, assuming labour costs and other factor input costs are unchanged
12 of 46
Economic cycle
fluctuations in the level of economic activity as measured by GDP. Typically there are four stages in the cycle; recession, recovery, boom and slowdown
13 of 46
Human capital
the knowledge and skills of the labour force
14 of 46
Marginal propensity to save (MPS)
proportion of additional income that is saved
15 of 46
Marginal propensity to tax (MPT)
proportion of additional income that is taxed
16 of 46
Marginal propensity to import (MPM)
proportion of additional national income that is spent on imports
17 of 46
Accelerator
the theory of investment that states that the level of investment depends on the rate of change of national income
18 of 46
Stocks
the amount of finished goods that firsm hold in order to be able to satisfy increases in demand
19 of 46
Long0run aggregate supply (LRAS) curve
the relationship between total supply and the price level in the long run. The LRAS curve represents the maximum possible output for the whole economy - its potential output
20 of 46
Classical economists
economists who believe that markets will 'clear', that prices and quantities adjust to change in the forces of supply of demand so that the economy produces its potential output in the long run
21 of 46
Keynesian economists
economists who believe the market failures will result in price and quantity rigidities such that the economy's equilibrium output in the long run may be less than its potential output
22 of 46
Labour force
all those people of working age who are in employment or actively seeking work
23 of 46
Labour force participation rate
a measure of the proportion of the population able to work who are in employment or who are actively seeking work
24 of 46
Capital output ratio
the amount of capital needed to generate each unit of output
25 of 46
Long-term capital flows
flows of money used for investment in assets (direct investment by a company in setting up production facilities or portfolio investment through buying shares in companies)
26 of 46
Short-term capital flows
flows of money that occur to take advantage of diffPublic sector net cash requirement (PSNCR)
27 of 46
Public sector net cash requirement (PSNCR)
the difference between the spending of general government (central and local government) and their revenue. if expenditure > revenue = budget defect. Expenditure < revenue = budget surplus. Budget deficit requires government to borrow money to make
28 of 46
Automatic stabilisers
the changes in government expenditure and taxation receipts that take place automatically in response to the economic cycle. E.g. expenditure on unemployment benefits rises during the recession phase of the business cycle
29 of 46
Economic stability
the avoidance of volatility in economic growth rates, inflation, employment/unemployment and exchange rate, in order to reduce uncertainty and promote business and consumer confidence and investment
30 of 46
Crowding out
when government borrowing reduces the funds available for private sector investment of raises the cost of investment by raising market interest rate
31 of 46
Cyclical deficit
a budget deficit that arises because of the operation of automatic stabilisers
32 of 46
Golden rule
a commitment by the UK government that, over the economic cycle, it will borrow only to invest and not for current expenditure
33 of 46
Credibility
(principal of fiscal policy): credible fiscal policy framework = where the government's commitment to economic stability is trusted by the public, business and financial markets
34 of 46
Flexibility
(principle of fiscal policy): a flexible fiscal policy framework has flexibility to deal with macroeconomic shocks, such as sudden and unexpected changes in AS and/orAS
35 of 46
Legitimacy
(principle of fiscal policy): legitimate fiscal policy framework has widespread support and about which there is general agreement among the public, business and politicians
36 of 46
Monetary transmission mechanism
the way in which monetary policy affects the inflation rate through the impact it has on other macroeconomic variables
37 of 46
Price stability
when general policy level does not change or, if it does change, the reate of change is low enough not to significantly affect the decisions of firms and households
38 of 46
Purchasing power of money
what a unit of currency will buy in terms of goods and services
39 of 46
Signalling function
changes in D and S of goods and services are signalled to producers and consumers through changes in absolute and relative price levels
40 of 46
Operational Independence
when a central bank is given responsibility for the conduct of monetary policy independent of political interference. The target for inflation though is normally set by governments
41 of 46
Symmetric inflation target
when deviations above and below the target are given equal weight in the inflation target
42 of 46
Asymmetric inflation target
when deviations below the inflation target are seen to be less important than deviations above the target
43 of 46
International competitiveness
the ability of an economy's firms to compete in international markets and thereby sustain increases in national output and income
44 of 46
Unit labour costs
the cost of labour per unit of output (including the social costs of employing labour as well as the wage costs
45 of 46
Relative unit labour costs
the cost of labour per unit of output of one country relative to its major trading partners
46 of 46

Other cards in this set

Card 2

Front

sustained increase in the general price level, measure in the UK by changes in the cost of a basket of goods and services bought by a typical household (CPI), weighted according to expenditure on each item in the basket

Back

Inflation

Card 3

Front

someone is out of work but actively seeking employment. Measured as the total number of people unemployed/% of the workforce

Back

Preview of the back of card 3

Card 4

Front

records money flows into and out of a country over a period of time

Back

Preview of the back of card 4

Card 5

Front

includes money flows due to trade, transfers of inters, profit and dividends and transfers of money by governments and international organisations

Back

Preview of the back of card 5
View more cards

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all Globalisation and trade resources »