Macro Economics Defintions .4

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  • Created by: Soph
  • Created on: 12-04-16 19:43
Bank of England
This is the central bank in the UK economy which is in charge of monetary policy
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Money
This is an asset that is used as a medium of exchange to purchase goods
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Inflation rate target
The CPI inflation rate target which is set by the government for the Bank of England to try to achieve is 2%
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Monetary Policy Committee
These are economists who meet once a month to set Bank rate and interest rate
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Bank rate
This is the rate of interest the Bank of England pays to commercial banks on their deposits held at the BofE
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Money supply
This is the stock of money in the economy, made up of cash and bank deposits
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Monetary Policy
This is a demand-side policy which involves interest rates and the money supply
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Contractionary monetary policy
This uses higher interst rates to decrease aggregate demand thus shifting the AD curve to the left
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Expansionary monetary policy
This lowers interest rates in order to increase aggregate demand thus shifting the AD curve to the right
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Exchange rate
The price of the currency measured in terms of another currency
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Fiscal Policy
This involves the use of taxation and government spending to achieve the government's policy objectives
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Expansionary fiscal policy
This decreases T and increases Gx in order to increase aggreage demand
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Contractionary fiscal policy
This decrease Gx and increases T in order to decrease aggregate demand
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Balanced Budget
This is when Gx=T
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Budget deficit
This is when Gx>T
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Budget surplus
This is when T>Gx
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Cyclical budget deficit
This is the part of the budget deficit which rises in the trough of the economic cycle and falls in the peak of the cycle
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Structural budget deficit
This is the part of the budget deficit which is not affected by the economic cycle and does not change
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Progressive Taxation
As income rises, a larger proportion of income is paid in tax
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Proportional Taxation
This is when the same proportion of income is paid in tax regardless of income
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Regressive Taxation
As income rises, a smaller proportion of income is paid in tax
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Supply-side policies
These policies aim to improve national economic performance by creating more competitive and efficient markets through interventionist policies
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Privatisation
This involves shifting ownership of state-owned assets into the private sector
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Marketisation
This involves shifting provision of goods and services from the non-market sector to the market sector
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Other cards in this set

Card 2

Front

This is an asset that is used as a medium of exchange to purchase goods

Back

Money

Card 3

Front

The CPI inflation rate target which is set by the government for the Bank of England to try to achieve is 2%

Back

Preview of the back of card 3

Card 4

Front

These are economists who meet once a month to set Bank rate and interest rate

Back

Preview of the back of card 4

Card 5

Front

This is the rate of interest the Bank of England pays to commercial banks on their deposits held at the BofE

Back

Preview of the back of card 5
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