Macroeconomics

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  • Created by: rohanm17
  • Created on: 03-02-19 18:24
Absolute advantage
A country has an absolute advantage if it can produce more of a good than other countries from the same amount of resources
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Aggregate demand
Total planned spending on the goods and services produced within the economy in a particular moment in time
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Aggregate Supply
The level of real output that all the firms in the economy plan to produce at different average price levels
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Aid
Resources given by the World bank or a countries government to help another country. Oxfam also provide aid
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Balance of payments
The record of all money flows or transactions between the resident of a country and the rest of the world in a particular period of time.
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Bank rate
Interest rate set by the Bank of England which is uses to charge when leading to commercial banks and other finical institution
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Supply-side policies
Any action taken by the government that enables businesses to lower cost,thus boosting efficiency and competitiveness of firms. successful policies shift the LRAS curve to the right raising potential output.
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Budget deficit and surplus
Deficit is when when government spending exceeds government revenue in a fixed time period. Surplus is when government revenue exceeding government spending.
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Comparative advantage
A measure in terms of opportunity cost.The country with the least opportunity cost when producing a good possesses a comparative advantage in that good.
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Corruption
A barrier holding back economic growth and development, especially in less developed countries
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Cost-push inflation
A rising price level caused by an increase in the costs of production,shown by a shift of the SRAS curve to the left.
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Currency union
Agreement between a group of countries to share a common currency
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Current Account
Measures all the currency flows into and out of a country in a particular time period in payments for exports and imports of goods and services , together with primary and secondary income
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Custom Union
A trading bloc in which member countries enjoy internal free trade in goods and possibly services, with all member countries protected by a comment external tariff barrier.
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Cyclical Unemployment/Demand-deficit unemployment
Occurring in the downswing of the economic cycle, caused by a lack of aggregate demand in the economy.
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Deflation
When the rice level is falling and the value of money is rising
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Disinflation
A fall in the rate of inflation, but inflation is still positive
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Demand-pull inflation
A rising price level caused by an increase in AD,shown by a shift of the AD curve to the right.
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Education and Training
Education develops individual knowledge and intelligence,while training develops work skills. both are necessary for economic growth and development
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European Union
An economic and partially political union established in 1993 which includes numerous central and eastern European nations.
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Eurozone
The name used for the group of countries that have replaced their national currencies with the euro. In 2015, 19 out 28 EU countries are in the eurozone.
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Exchange rate
The external price of currency, usually measured against another currency such as the Dollar ,used to compare values of different currencies
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Expenditure-reducing policy
Government policy used to correct current account deficit/surplus by increasing or decreasing AD to raise or decrease demand for imports.
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Expenditure-switching policy
Government policy used to correct current account deficit/surplus by switching domestic demand towards or against domestically produced goods
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Financial account
Part of BOB which records capital flows into and out of a the economy.
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Financial Conduct Authority
Regulatory for the financial market who make sure consumers get a fair deal and that firms have the best interest at heart for consumers.
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Financial Policy Committee
Part of Bank of England which as the responsibility of identifying, monitoring and taking action to remove or reduce systemic risk with the view of protecting and enhancing the UK financial system.
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Fiscal policy
Use of government spending, taxation and the government budgetary position to achieve governments policy objective
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Fisher equation of exchange
Stock of money in the economy multiplied by the velocity of circulation of money equals the price level multiplied by the quantity of real output in the economy.
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Foreign direct investment
Investment in capital assets, in a foreign country by a business with headquarter in another country.
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Forward guidance
Signals to economic agents about BOK interest rate policy for the years ahead, so that economic agents are not surprised by a sudden change
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Full employment
Occurs when the number of people wishing to work equals the number of workers whom employers wish to hire.
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Frictional unemployment
Short term transitional unemployment or "between jobs" unemployment
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Inflation
The continuous and persistence rise in price level and a fall in the value of money
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Indicators of development
These include GDP per head,mortality rates and health statistics
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Infrastructure
Fixed capital goods that are needed for businesses to operate efficiently
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Long-run Aggregate supply
Real output that can be supplied when the economy is on its production possibility frontier utilizing the available FOP in the economy.
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Globalisation
The process of growing economic integration of the world's economies
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Long-run Economic Growth
Occurs when the productive capacity of the economy is increasing shown by a shift of the LRAS to the right or a new PPF boundary.
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Monetarist/Quantity theory of money
An economist who argues that a prior increase in the money supply is always the cause of inflation
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Monetary policy
Government policy which uses interest rates, money supply and exchange rates to achieve government objective
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National Debt
The amount of accumulated debt,resulting from past government borrowing this is owed by the UK government.
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Natural rate of unemployment
When the aggregate labour market is in equilibrium meaning demand for labour equals the supply of labour.
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Negative/Positive output gap
Occurs when current level of real GDP is below or above the potential output of the economy.
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Output gap
The difference between the current level of real GDP and the potential output of the economy
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Phillips curve
Curve showing the relationship between inflation and unemployment
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Injections
Investment spending by firms on capital goods, government spending and overseas spending on the economy's exports are money inflows into the circular flow on income
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Withdrawals
Saving,Tax revenue and spending on imports are money outflows of the circular flow of income.
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Portfolio investment
The purchase of one countries securities securities, by the resident or financial institution of another country
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World Trade Organization
International origination whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers to trade
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Unemployment
Number of people who are out of employment and are actively searching for work but are unable to or are not wiling to accept the national living wage.
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Short-run Economic growth
Occurs when an increase in aggregate demand brings spare capacity into production therefore the economy is producing on its PPF boundary.
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Structural Unemployment
Occurs when certain industries decline because of long-term changes in market conditions. This is due to changes in the pattern of demand or technological change.
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Primary income flows
Inward PIF= Income generated by UK-owned capital assets located overseas. Outward PIF= income generated by overseas-owned capital assets located in the UK
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Progressive/Proportional/Regressive tax
Progressive= income paid in tax rises as income rises Proportional=income paid in tax stays the same as income rises Regressive= income paid in tax falls as income rises
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Quotes
Physical limits on the quantities of imported goods allowed into a country.
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Real-wages
Wages that have been adjusted for inflation. Real wage measures the amount of goods and services which can be bought.
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Real-wage Unemployment
Caused by real wages rates being too high to clear the labour market causing in excess supply in labour.
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Secondary income flows
Current transfer like international AID or transfers between the UK and the EU flowing into and out of the UK economy in a particular year.
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Quantitative easing
Form of Monetary policy, where the BOE creates new money electronically which is then used to buy financial assets on the countries financial markets
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Taxation
Levies charged by the local government to raise revenue and primarily to finance government spending.
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Traffis
Taxes imposed on imports from other countries entering a country.
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Systemic risk
Risk of a breakdown of the entire finical system,caused by inter-linkages within the financial system.
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Supply-policy improvements
Action taken by the private sector to improve productivity which reduces cost and increases efficiency and competitiveness. These are resulted form investment and innovation without government action.
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Cyclical budget deficit
Budget rises which rises in the downswing of th economic cycle e.g. recession
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Structural budget deficit
Budget deficit caused by structural changes in the economy affecting government finance
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Other cards in this set

Card 2

Front

Total planned spending on the goods and services produced within the economy in a particular moment in time

Back

Aggregate demand

Card 3

Front

The level of real output that all the firms in the economy plan to produce at different average price levels

Back

Preview of the back of card 3

Card 4

Front

Resources given by the World bank or a countries government to help another country. Oxfam also provide aid

Back

Preview of the back of card 4

Card 5

Front

The record of all money flows or transactions between the resident of a country and the rest of the world in a particular period of time.

Back

Preview of the back of card 5
View more cards

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