Macroeconomic Definitions

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Aggregate Demand
Total spending on goods and services in an economy; components are C+I+G+(X-M)
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Aggregate Supply
The total amount of output in an economy
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Balance of Payments
Record of a country's transactions with the rest of the world
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Base Year
A year chosen as a good comparison in a series of data, when building an index
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A contraint on the supply side of the economy which causes costs of aggregate supply to rise as the economy grows, shortage of resources.
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Business cycle
The tendency of economic activity to rise above and below the trend rate of economic growth. The components are boom, recession, slump, recovery
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The annual statement by the government of its intentions to tax and spend in future years. Usually comes in March.
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Budget Surplus
The amount by which tax revenue exceeds government spending
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Budget Defecit
The amount by which government spending exceeds tax revenue
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Claimant Count
A measure of those claiming unemployment benefits
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Circular flow of income
A simple model of the economy which shows the movement of goods and services between households and firms, and their corresponding payments in money terms
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Constant prices
Where the effects of inflation have been taken out
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Consumer Price Index
The measure of the average level of prices. Increases in the CPI are known as inflation, used as a target of MPC. Excludes housing costs
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Total planned household spending
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Cost of Living
A measure of how much has to be spent to maintain living standards. Measured by comparing prices in 'basket of goods'
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Current account of the balance of payments
A record of a country's trade of exports, imports, investment income and current transfers with the rest of the world
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Current prices
The effects of inflation have been taken out
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When data is presented in a serial order, a decile marks boundaries between 10% band widths. Deciles used for comparison between sets of data, and have the advantage that they are not distortion on the extreme distribution
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Demand-side policies
Policies used by the government to shift AD. The main policies are monetary policy and fiscal policy
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Economic growth
A measure of the increase in real GDP or potential GDP
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Equilibrium National Income or Equilibrium level of output
The level of income or output at which AD equals AS
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Employment rate
The percentage of those in the workforce(those able and willing to work) who are in employment
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Exchange rate
The price of one currency in terms of another
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The value of goods and services sold abroad. Shown in the circular flow of income as money coming into the country i.e. injection
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Family expenditure Survey
A survey collecting personal diaries of expenditure by families and individuals in the UK. The data's collected using computer assisted interviewing and a paper questionnaire. Response rate 63%
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A movement of goods and services OR the money used to pay for them, over a period of time
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Fiscal Defecit
An inflationary fiscal policy, Gvt spending >tax receipts
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Fiscal Surplus
A deflationary fiscal policy, where gvt spending
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Fiscal Policy
The gvts manipulation of its spending and taxation in order to affect AD
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Government Expenditure
Spending by central and local government
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Gross Domestic Product
Total value of output in an economy, measure by total production by firms OR total incomes by the factors of production
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Hot money
Short term; speculative flows between countries. May distort the exchange rate so don't reflect PPP. Motivation for this is a rise in interest rates.
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Human Development Index
A measure of economic development or quality of life, composed of three equally weighted index numbers, comprising health, education, GDP per head.
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ILO (International Labour organisation)
A measure of unemployment used in most rich countries, which surveys 51,000 households by phone, asking whether been looking for work past 4 w, willing to start in 2
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The value of goods and services bought from abroad. These are shown in the circular flow of income as money leaving the country ie. withdrawal
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Income gap or Income inequality
A measure of the gap between the incomes of various groups in an economy often shown by the average income between lowest and highest decile. The gap widens in periods of economic growth
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A simple way to compare data with a base year
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A general and persistent increase in the price level
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Inflation targeting
Narrowly focused MP which seeks to keep the rate of inflation within a certain band, ignoring other objectives
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Where money flows into the circular flow, specifically investment, government spending and exports.
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Interest rate
The cost of borrowing money
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An increase in the capital stock or the purchase of capital goods by firms e.g machinery. Determined by interest rates, confidence and the availability of credit
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Labour productivity
Output per worker or per hour worked
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Monetary Policy
Decisions made by using monetary instruments such as the interest rate. MPC- a group of 9 economists and industrialists who meet at least once a month, since 1997
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The number of times a rise incomes exceeds the rise in injections that caused it. It measures the knock on effects when an injection or withdrawal changes.
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National Income
The Total earnings in the economy of individuals, firms and government, including money earned from exports
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Net exports (x-m)
The difference between the money earned by exports less the money spent on imports. It is a component of AD
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New deal of unemployed
Measure introduced in 1997 which aims to link unemployment benefits to attempt to get back into the job market
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Nominal values
Where the effects of inflation are still incorporated in the data
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Output Gap
The difference between actual real GDP growth and potential GDP growth
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Per Capita Per head
GDP per head measures the average amount that each person contributes to the economy including those who contribute nothing
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Phillips curve
This is an empirical observation that there is a possible trade off between inflation and unemployment - less of one means more of the other
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Output per unit of input
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Productivity gap
A measure of the difference between productivity levels in one country compared to others
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Real values
Where the effects of inflation have been taken out
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Spare Capacity
A situation where there are unemployed resources in an economy
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Standard of living
A measuure of the welfare of people living in an economy
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A physical amount of goods or services that exist at a point in time, or the money that might be used to pay for them
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Supply-side policies
Actions by the gvt designed to promote market forces
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Unemployment Rate
The percentage of the workforce (that is, able and willing to work) that is not currently employed
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Volume and Value
Volumes measure quantities e.g number of goods sold on the export market, and values measure the price times quantity
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Stock of assets, e.g. property, shares
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Where money flows out of the circular flow, specifically savings, taxation and imports
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Other cards in this set

Card 2


The total amount of output in an economy


Aggregate Supply

Card 3


Record of a country's transactions with the rest of the world


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Card 4


A year chosen as a good comparison in a series of data, when building an index


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Card 5


A contraint on the supply side of the economy which causes costs of aggregate supply to rise as the economy grows, shortage of resources.


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