MSc Economics

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  • Created by: PMD218
  • Created on: 20-12-19 20:31
What is a Specific Tax?
Per unit tax (linear tax)
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What is Normal Profit?
The profit required to keep the firm in an industry at its present capacity
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What is an Ad Valorem tax?
A percentage of the total value
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What is meant by the term "external economies"?
The economies which are enjoyed by all firms in an industry
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What is Diminishing Marginal Utility?
Increased consumption eventually leads to decreased satisfaction
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What are Marginal Costs?
The costs associated with producing an extra unit of output
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What are Fixed Costs?
Unavoidable short-run costs which are present regardless of level of output
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What are Variable Costs?
Costs which vary based upon output
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What is meant by the term "Debt"?
The total amount owed as a nation
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A two sector economy...?
Is a closed cycle economy
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What is the Deficit?
The amount by which the national debt is growing
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What kind of relationship does demand have with price?
Inverse
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What kind of relationship does supply have with price?
Direct
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Generally, what is "price elasticity"?
Change in price/income
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Define "supply"
The quantity of product that a producer is prepared to make and offer for sale at a given time and given price
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Define "demand"
The quantity of a product that people are able and willing to purchase at a given price and a given time
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What is meant by the phrase 'ceteris paribus'?
All things remaining equal
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In the long-run...
All factors of production can be variable
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In the short-run...
At least one factor of production is fixed
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Define "price"
Prices are signals and incentives to facilitate the rationing of scarce resources and allocation amongst competing ends
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Define "effective demand"
Demand which involves being in the market and able to purchase
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What is the opportunity cost?
The cost of forgoing the next best alternative
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What is a positive externality?
Benefits that are not reflected in the price mechanisms for that good
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What is the situation if a point falls within the boundary of a Production Possibility Frontier?
A state of inefficiency
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What is the situation if a point falls directly on the boundary of a Production Possibility Frontier?
Output combinations are at maximum obtainable efficiency
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On a Production Possibility Frontier - what happens if we increase our factors of production?
Curve extends outwards
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What is "market equilibrium"?
Refers to a price at which both parties (suppliers and consumers) are agreed to exchange
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Essentially, what is the Marginal Propensity to Save?
As income increases, there eventually becomes a point where the possibility to start saving occurs
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In economics, what does the term "utility" refer to?
Satisfaction
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'Diseconomies of Scale' occur when...
A firm exceeds the optimum level of output and average costs rise
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What is meant by the term 'Supernormal Profit'?
Any profit over and above that of normal profit
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'Subnormal Profits' occur when...
total costs exceed revenue
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What fundamental impact does taxation have?
Discourages consumption
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What is 'Diminishing Marginal Utility'?
Relates to increased consumption eventually leading to decreased satisfaction
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How does a firm decide upon price and output (supply)?
Compares costs & revenues
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What is a negative externality?
Costs that are not reflected in the price mechanisms for that good
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Which term describes the additions to a three sector economy?
Injections
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To which economical concept is the 'Multiplier Effect' linked?
Marginal Propensity to Consume
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Aggregate demand can be defined as...
The total demand for goods and services within a particular market
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If amplification of errors is a concern regarding credit agencies, how can this be termed?
'Concentration risk'
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Which body regulates CRAs within Europe?
European Securities & Markets Authority
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Which legislation ensures that all CRAs in the UK maintain separate databases?
Data Protection Act 1988
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Which legislation in the UK do all CRAs fall under?
Consumer Credit Act 1974
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From which market is the Global Financial Crisis known to have started?
US sub-prime mortgage market
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At what value did the Bank of England value all financial losses during the Global Financial Crisis?
£1.8 trillion
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Property cycles are...
recurrent but irregular fluctuations in the rate of all property total returns
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Short property cycles last for...
4-7 years
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Long property cycles last for...
9-10 years
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Endogenous property cycles are those which...
originate from within the industry/property sector
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Exogenous property cycles are those which...
those which originate from the macroeconomy (outside of the property industry)
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Interest rates are
the price of money (expressed as a % of the sum) and they are determined by supply and demand of funds (liquidity, risk and expectations)
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Liquidity in terms of finance relates to
lower rates generally charged on short-term finance as these loans can be recalled quickly
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How does a reverse yield gap occur?
If high interest rates on long-term finance outweigh the yields achieved by the borrower
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Ripening costs are...
those costs which arise through holding land in anticipation of profitable development (includes interest on capital tied up, plus any speculative amount paid above current use value in hope of obtaining planning permission)
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Waiting costs are those which arise due to...
development taking time so there is a delay before revenue is received (includes interest & professional fees)
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Dividends are
shares of profits
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Debt finance is...
obtaining money via loans
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Equity finance is...
obtaining money via the sale of shares
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The FCA =
Financial Conduct Authority
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The PRA =
Prudent Regulation Authority
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Endowment mortgages
Involve the repayment of interest
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What is supply like in the short run?
Inelastic/Perfectly Inelastic
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What is supply like in the long run?
Elastic
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What is market equilibrium?
Where market demand = market supply
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Why is supply inelastic in short run?
Time needed for supply to react to changes in price
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A table of price, number of items demanded & revenue is
A market demand schedule
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What is the 'circular flow of income'?
Rate at which money goes around the economy
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What is the correct formula for Aggregate Demand?
AD = C+I+G(X-M)
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What does the term 'I' mean in the Aggregate Demand formula?
Investment
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What does the term 'M' mean in the Aggregate Demand formula?
Imports
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Marginal Costs are
The extra costs associated with each additional unit of production
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In the short run
At least one FOP is fixed
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In the long run
All FOPs can be variable
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As output increases
Average costs decrease
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Productive Efficiency of a firm is attained when
Lowest level of average costs are achieved
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Diseconomies of scale occur when
A firm exceeds the optimum levels of output and average costs rise
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Supernormal profit is also known as
Excess or Surplus profit
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What is the FCA?
Financial Conduct Authority
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Monopolistic Competition is most similar to
Perfect Competition
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What is a non-recourse loan?
A loan which involves only the collateral/security involved in that specific project
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What is a recourse loan?
A loan which involves the collateral/security of any wider project
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What is a limited recourse loan
A hybrid between recourse and non-recourse loan
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Long term finance often involves...
equity participation
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Property yield (long term finance) is
Where a minimum yield is agreed with the lender and surplus is profit for the developer
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A disadvantage of a joint company is?
Tax must be paid on dividends
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In order to sell shares a company must
become public and expect to raise at least £50m
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Dividends are
shares of profit
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Ordinary shares have a nominal value also known as a
par value
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Bonds can also be known as
Loan Stock or Loan Notes
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Eurobonds are usually worth between
£25-100m
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The term for the time a bond can be redeemed is?
Maturity
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If a lender obtains a charge on the tenants of a property this is called?
Rent charge
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Real Estate investment trusts pay out?
90% in dividends
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The PRA looks at
macroeconomic issues
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A horizontal merger is
A merger of two companies in the same industry
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A vertical merger is
A merger of two companies in the same industry but at different supply chain levels
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A forward vertical merger is
movement towards the consumer
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A backward vertical merger is
movement towards the raw materials
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Elasticity =
the rate of change/level of response
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Price elastic demand is
demand changes more than proportionally to change in price
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Price inelastic demand is
demand changes less than proportionally to change in price
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Normal goods are
Goods where the demand increases as income increases
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Inferior goods are
Goods where the demand decreases as income increases
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The statutory legislation underpinning business rates is
Local Government Finance Act 1988
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'Completion notices' are served by local authorities
up to 3 months prior to completion
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A hereditament is a
unit of property
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Construction contributes
£90bn to UK economy
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There are X number of construction firms in the UK
280,000
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Construction accounts for X percentage of UK employment
10%
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As efficiency increases, redevelopment increases, more capital is combined with land and is made cheaper (relative to land). What happens?
Need to build upwards
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Owner occupation rose since 1920/30s. When was it at its peak?
2008
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When was the peak of council housing reached?
1951
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How many residential properties are in the UK?
26.6m
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Other cards in this set

Card 2

Front

What is Normal Profit?

Back

The profit required to keep the firm in an industry at its present capacity

Card 3

Front

What is an Ad Valorem tax?

Back

Preview of the front of card 3

Card 4

Front

What is meant by the term "external economies"?

Back

Preview of the front of card 4

Card 5

Front

What is Diminishing Marginal Utility?

Back

Preview of the front of card 5
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