Key terms for AS Macroeconomics

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  • Created by: sophie
  • Created on: 13-05-13 14:01
AD
total spending on goods and services in an economy= C+G+I+(X-M)
1 of 96
Capital
factors of production that are used to make other goods and services, e.g. machinery, technology
2 of 96
constant prices
these tell us that data has been adjusted for inflation
3 of 96
GDP
monetary value of the output of goods and services produced within an economy
4 of 96
wealth
the value of assets including property,shares and savings
5 of 96
informal economy
economic activity which goes unrecorded
6 of 96
injection of demand
money entering the circular flow- I, G &X
7 of 96
leakage of demand
money leaving circular flow- S, T &I
8 of 96
the multiplier effect
an initial injection into the economy that leads to a greater increase in AD & GDP than the value of the initial injection
9 of 96
nominal
value unadjusted for the effects of inflation
10 of 96
nominal GDP
monetary value of all goods and services expressed at current prices
11 of 96
paradox of thrift
if people save more, C is reduced thus AD falls, impeding economic growth and in fact lowering the general level of savings
12 of 96
precautionary saving
saving due to fears of a loss in income or employment
13 of 96
real disposable income
income after taxes and benefits, adjusted for the effects of inflation
14 of 96
real wage
the nominal wage adjusted for the effects of inflation
15 of 96
saving ratio
the % of disposable income that is saved rather than spent
16 of 96
withdrawal
a leakage from the circular flow of income (S T I)
17 of 96
the accelerator effect
capital investment is linked positively to expected growth of consumer demand
18 of 96
animal spirits
state of confidence held by consumers and buisinesses
19 of 96
components of AD
C=65% G=23% I=15%
20 of 96
demand shock
an unexpected shock to one or more components of AD e.g. recession in trading partners economy
21 of 96
depression
severe recession where GDP falls by at least 10%
22 of 96
double dip recession
an economy goes into recession twice without a full recovery in between
23 of 96
economic cycle
variations in the annual rate of growth of an economy over time
24 of 96
economic shocks
unpredictable events such as volatile prices for oil, gas and foodstuffs
25 of 96
economic stability
indicators do not change much from one year to another
26 of 96
fine tuning
changes in policy designed to gradually influence demand, output and prices
27 of 96
gross investment
measures total investment spending in buildings and machinery some of which is replacement investment
28 of 96
lagging indicators
indicators which tend to follow economic cycles e.g. unemployment
29 of 96
leading indicators
indicators which predict future economic trends e.g. confidence
30 of 96
output gap
difference between potential and real national income in an economy
31 of 96
recession
a period where an economy has a fall in output, 2 consecutive quarters of negative GDP
32 of 96
slowdown
a fall in the rate of growth but not a full scale recession
33 of 96
slump
a sustained decrease in real GDP and a persistent rise in unemployment
34 of 96
supply shock
an unexpected shock to one or more components of AS e.g. rise in gas prices
35 of 96
trade off
choice made between achieving two macroeconomic objectives-
36 of 96
AAA credit rating
best credit rating, indicating that a risk of default on loans is neglible
37 of 96
budget deficit
when government spending is greater than tax revenues- leads to a rise in national debt
38 of 96
business taxation
tax aimed at firms- corporation tax, VAT and carbon tax
39 of 96
fiscal austerity
fiscal spending is cut and/or taxes raised
40 of 96
fiscal stimulus
increased spending, lower taxation to boost economic activity
41 of 96
government debt
debt issued by a national government
42 of 96
keynesian economics
BELIEF that state can directly stimulate demand in a stagnating economy, for instance by borrowing money for projects
43 of 96
progressive tax
tax that takes an increasing proportion of income as income increases
44 of 96
regressive tax
tax that takes smaller proportion of income as income rises
45 of 96
sovereign debt
debt issued or guaranteed by a government
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BRICS
group of fast-growing economies
47 of 96
catch up effect
countries that start off poor grow more rapidly than rich countries causing a convergence in living standards as measure by GDP per capita
48 of 96
de industrialisation
a decline in the share of national income from manufacturing industries
49 of 96
economic growth
the increase in a country's capacity to produce goods and services
50 of 96
gini coefficient
measures of the extent to which groups of households from the bottom of the income distribution upwards receive less than an equal share of income
51 of 96
GDP per capita
national income per head of population
52 of 96
gross national income
monetary value of goods and services in an economy including overseas investment
53 of 96
HDI
index devised to assess comparative levels of development in countries, quantified in terms of literacy, life expectancy and purchasing power (gdp at PPP)
54 of 96
Lorenz curve
way of showing unequal distribution of income and wealth in an economy
55 of 96
purchasing power parity (PPP)
after taking the exchange rate into account a basket of goods in one country should cost the
56 of 96
sustainable growth
growth without non renewable resources being used up
57 of 96
appreciation
when the value of an asset or an exchange rate increases in value relative to another
58 of 96
credit crunch
banks across country reduce lending due to falling confidence that loans will be repayed
59 of 96
deflation
a persistent fall in the general price level of goods and services
60 of 96
depreciation
a fall in the market value of one exchange rate compared with another
61 of 96
disinflation
a fall in the rate of inflation- slower increase in prices but not a fall in prices
62 of 96
eurozone
17 countries that share a single currency (euro) and a common interest rate policy set by European Central Bank
63 of 96
inflation target
2% CPI
64 of 96
over heating
when an economy grows too fast and AS cant keep up with AD then cost push and demand pull inflation occurs
65 of 96
price stability
a period of low stable inflation between 1-4%
66 of 96
quantitative easing
central bank increases base supply of money by electronically creating money to buy bonds from the government (since 2009)
67 of 96
real interest rate
nominal rate of interest adjusted for inflation
68 of 96
transmission mechanism
process which changes interest rates and QE work to affect demand, output and prices
69 of 96
infrastructure
facilities essential for the efficient functioning of a county and its economy
70 of 96
factor mobility
extent to which resources can move to alternative uses
71 of 96
human capital
accumulated skills, experiences, aptitudes and motivation of a nation's workforce
72 of 96
innovation
changes to products or production processes-important for improving dynamic efficiency
73 of 96
investment
spending on new capital
74 of 96
productive potential
productive capacity of an economy boosted by high quality investment
75 of 96
productivity
output per hour worked- how efficiently inputs are used to produce outputs
76 of 96
balance of payments
total of all money coming into a country from abroad minus all the money coming out of a country during the same period
77 of 96
balance of trade
X-M
78 of 96
current account
balance of X&M of goods and services, investment income and transfers
79 of 96
currency war
countries try to devalue their currency to gain an advantage over each other
80 of 96
exchange rate
rate at which one currency is traded against another
81 of 96
export revenue
sales from selling goods and services abroad
82 of 96
FDI
foreign direct investment from overseas businesses into a specific country
83 of 96
remittance
sending money to people in another country
84 of 96
tariff
tax on imported goods may be ad valorem or specific
85 of 96
trade deficit
when a country imports more than they export
86 of 96
trade surplus
a country exports more than they import
87 of 96
claimant count
number of people claiming job seeker's allowance benefits
88 of 96
cyclical unemployment
involuntary demand due to a lack in demand- also known as Keynesian unemployment
89 of 96
frictional unemployment
transitional unemployment -in active job search
90 of 96
full employment
jobs for all that want them BUT NOT 0 UNEMPLOYMENT because some people are always between jobs
91 of 96
labour shedding
businesses reduce size of workforce
92 of 96
long term unemployed
people without jobs for than a year
93 of 96
economically active
aged 16+ either employed or unemployed
94 of 96
structural unemployment
lack of required skills for jobs due to occupational and geographical immobility of labour
95 of 96
unemployment trap
disincentive to work because getting a job will make a worker more worse off than if they were claiming benefits
96 of 96

Other cards in this set

Card 2

Front

factors of production that are used to make other goods and services, e.g. machinery, technology

Back

Capital

Card 3

Front

these tell us that data has been adjusted for inflation

Back

Preview of the back of card 3

Card 4

Front

monetary value of the output of goods and services produced within an economy

Back

Preview of the back of card 4

Card 5

Front

the value of assets including property,shares and savings

Back

Preview of the back of card 5
View more cards

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