Macroeconomics Keyterms

HideShow resource information
  • Created by: Cara Li
  • Created on: 17-03-15 22:11
Aggregate demand
The total demand for a country's goods and services at a given price level and in a given time period.
1 of 101
Price level
The average of each of the prices of all the products produced in an economy.
2 of 101
Consumer expenditure
Spending by households on consumer products.
3 of 101
Investment
Spending on capital goods.
4 of 101
Government spending
Spending by the central government or local government on goods and services.
5 of 101
Exports
Products sold abroad.
6 of 101
Imports
Products bought from abroad.
7 of 101
Net exports
The value of exports minus the value of imports.
8 of 101
Transfer payments
Money transferred from one person or group to another not in return for any good or service.
9 of 101
Job seeker's allowance
A benefit paid by the government to those unemployed and trying to find a p
10 of 101
Trade surplus
The value of exports exceeding the value of imports.
11 of 101
Trade deficit
The value of imports exceeding the value of exports.
12 of 101
Consumer confidence
How optimistic consumers are about future economic prospects.
13 of 101
Rate of interest
The charge for borrowing money and the amount paid for lending money.
14 of 101
Average propensity to consume (APC)
The proportion of disposable income spent. It is consumer expenditure divided by disposable income.
15 of 101
Net savers
People who save more than they borrow.
16 of 101
Wealth
A stock of assets, e.g. property, shares and money held in a savings account.
17 of 101
Distribution of income
How income is shared not between households in a country.
18 of 101
Inflation
A sustained rise in the price level.
19 of 101
Saving
Real disposable income minus spending.
20 of 101
Average propensity to save (APS)
The proportion of disposable income saved. It is saving divided by disposable income.
21 of 101
Target savers
People who save with a target figure in mind.
22 of 101
Dissave
Spending more than disposable income.
23 of 101
Savings ratio
Savings as a proportion of disposable income.
24 of 101
Capacity utilisation
The extent to which firms are using their capital goods.
25 of 101
Corporation tax
A tax on firm's profits.
26 of 101
Retained profits
Profit kept by firms to finance investment.
27 of 101
Unit cost
Average cost per unit of output.
28 of 101
Real GDP
The country's output measured in constant prices and so adjusted for inflation.
29 of 101
Gross domestic product (GDP)
The total output of goods and services produced in a country.
30 of 101
Exchange rate
The price of the currency in terms of another currency.
31 of 101
Tariff
A tax on imports.
32 of 101
Government bond
A financial asset issued by the central or local government as a means of borrowing money.
33 of 101
Aggregate supply
The total amount that producers in an economy are willing and able to supply at a given price level in a given time period.
34 of 101
Productivity
Output, or production, of a good or service per worker per unit of a factor of production in a given time period.
35 of 101
Privatisation
Transfer of assets from the public to the private sector.
36 of 101
Macroeconomics equilibrium
A situation where aggregate demand equals aggregate supply and real GDP is not changing.
37 of 101
Circular flow of income
The movement of spending and income throughout the economy.
38 of 101
Factor services
The services provided by the factors of production.
39 of 101
Leakages
Withdrawals of possible spending from the circular flow of income.
40 of 101
Injections
Additions of extra spending into the circular flow of income.
41 of 101
Multiplier effect
The process by which any change in a component of aggregate demand results in a greater final change in real GDP.
42 of 101
Overheating
The growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation.
43 of 101
Output gap
The difference between an economy's actual and potential real GDP.
44 of 101
Trend growth
The expected increase in potential output over time.
45 of 101
Economic growth
In the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is in the maximum output that the economy can produce.
46 of 101
Unemployment
A situation where people are out of work but are willing and able to work.
47 of 101
Labour force
The people who are employed and unemployed, that is, those who are economically active.
48 of 101
Economically inactive
People of working age who are either employed nor unemployed.
49 of 101
Deflaton
A sustained fall in the general price level.
50 of 101
Balance of payments
A record of money flows coming in and going out of a country.
51 of 101
Elastic
Responsive to a change in market conditions.
52 of 101
Inflation rate
The percentage increase in the price level over a period of time.
53 of 101
Sustainable economic growth
Economic growth that can continue over time and does not endanger future generations' ability to expand productive capacity.
54 of 101
Trend growth
The expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation.
55 of 101
Full employment
A situation where those wanting and able to work can find employment at the going wage rate.
56 of 101
Current account deficit
When more money is leaving the country than entering it, as result of sales of its exports, income and current transfers from abroad being less than imports and income and current transfers going abroad.
57 of 101
Hyperinflation
An inflation rate above 50 per cent.
58 of 101
Nominal GDP
Output measured in current prices and so not adjusted for inflation.
59 of 101
Labour productivity
Output per worker hour.
60 of 101
Informal economy
Economic activity that is not recorded or registered with the authorities in order to avoid paying tax or complying with regulations, or because the activity is illegal.
61 of 101
Economy of scale
The advantage of producing on large scale, in the form of lower long-run average cost.
62 of 101
Unemployment rate
The percentage of the labour force who are out of work.
63 of 101
Labour Force Survey
A measure of unemployment based on a survey using the ILO definition of unemployment.
64 of 101
International Labour Organisation (ILO)
A member organisation of the United Nations that collects statistics on labour market conditions and seeks to improve working conditions.
65 of 101
Claimant count
A measure of unemployment that includes those receiving unemployment-related benefits.
66 of 101
Consumer price index (CPI)
A measure of changes in the price of a representative basket of consumer goods and services. Differs from the retail prices index (RPI) in methodology and coverage.
67 of 101
Retail prices index (RPI)
Measure of inflation that is used for adjusting pensions and other benefits to take in account of changes in inflation and frequently used in wage negotiations. Differs from the consumer prices index (CPI) in methodology and coverage.
68 of 101
Cyclical unemployment
Unemployment arising from a lack of aggregate demand.
69 of 101
Structural unemployment
Unemployment caused by the decline of certain industries and occupations due to changes in demand and supply.
70 of 101
Frictional unemployment
Short term unemployment occurring when workers are in-between jobs.
71 of 101
Demand-pull inflation
Increases in the price level caused by increases in aggregate demand.
72 of 101
Cost-push inflation
Increases in the price level caused by increases in the costs of production.
73 of 101
Hysteresis
Unemployment causing unemployment.
74 of 101
Long-term unemployment
Unemployment lasting for more than one year.
75 of 101
Menu costs
The cost of changing prices due to inflation.
76 of 101
Shoeleather costs
Costs in terms of the extra time and effort involved in reducing money holdings.
77 of 101
Inflationary noise
The distortion of price signals caused by inflation.
78 of 101
Real interest rate
The nominal interest rate minus the inflation rate.
79 of 101
Fiscal drag
People's income dragged into higher tax bands as a result of tax brackets not being adjusted in line with inflation.
80 of 101
International Monetary Fund (IMD)
An international organisation that helps co-ordinate the international monetary system.
81 of 101
World Trade Organisation (WTO)
An international organisation that promotes free international trade and rules on international trade disputes.
82 of 101
Exchange rate
The price of one currency in terms of another currency or currencies.
83 of 101
Monetary Policy Committee (MPC)
A committee of the Bank of England with responsibility for setting the interest rate in order to meet the government's inflation target.
84 of 101
Fiscal policy
The taxation and spending decisions of a government.
85 of 101
Monetary policy
Central bank and/or government decisions on the rate of interest, the money supply and the exchange rate.
86 of 101
Supply-side policy
Policies designed to increase aggregate supply by improving the efficiency of labour and product markets.
87 of 101
Reflationary
Of policy measures designed to increase aggregate demand.
88 of 101
Deflationary
Of policy measures designed to reduce aggregate demand.
89 of 101
Discretionary fiscal policy
Deliberate changes in government spending and taxation designed to influence aggregate demand.
90 of 101
Automatic stabilisers
Forms of government spending and taxation that change automatically of offset fluctuations in economic activity.
91 of 101
Economic cycle
The tendency for economic activity to fluctuate outside its trend growth rate, moving from a high level of economic activity (boom) to negative economic growth (recession).
92 of 101
Progressive tax
A tax takes a higher percentage from the income of the rich.
93 of 101
Regressive tax
A tax that takes a greater percentage from the income of the poor.
94 of 101
Recession
A fall in real GDP over a period of six months or more.
95 of 101
Human capital
Education, training and experience that a worker. or group of workers, possesses.
96 of 101
Tariff
A tax on imports.
97 of 101
Quata
A limit on imports.
98 of 101
Occupational immobility of labour
Difficulty in moving from one type of job to another.
99 of 101
Protectionism
The protection of domestic industries from foreign competition.
100 of 101
Voluntary export restraint (VER)
A limit placed on imports from a country with the agreement of that country's government.
101 of 101

Other cards in this set

Card 2

Front

The average of each of the prices of all the products produced in an economy.

Back

Price level

Card 3

Front

Spending by households on consumer products.

Back

Preview of the back of card 3

Card 4

Front

Spending on capital goods.

Back

Preview of the back of card 4

Card 5

Front

Spending by the central government or local government on goods and services.

Back

Preview of the back of card 5
View more cards

Comments

Pete Langley - Get Revising founder

epic!

Similar Economics resources:

See all Economics resources »See all Macroeconomics resources »