The UK economy- performance and policies- Definitions

HideShow resource information
Macroeconomics
The study of the interrelationships between economic variables at aggregate (macroeconomic) level
1 of 80
Economic growth
Increase in the long run productive capacity of an economy
2 of 80
Gross Domestic product (GDP)
A measure of economic activity carried out in the domestic economy over a period of time
3 of 80
Gross National Income (GNI)
GDP plus net income from abroad
4 of 80
GDP per capita
Real GDP/population
5 of 80
Nominal
Not adjusted for inflation
6 of 80
Real
Takes inflation into account & adjusts value
7 of 80
Purchasing Power Parities (PPP)
This estimates how much the exchange rate needs adjusting so that an exchange between currencies is equivalent according to that currencies purchasing power
8 of 80
Inflation
The rate of the increase in the average price level in an economy
9 of 80
Deflation
A fall in the average price level of prices (negative inflation)
10 of 80
Disinflation
A fall in the rate of inflation
11 of 80
Consumer Price Index (CPI)
a measure that examines the weighted average of prices of a basket of consumer goods and services
12 of 80
Retail Price Index (RPI)
A measure of the average level of prices in the UK, including mortgages and taxes
13 of 80
Demand-pull Inflation
Inflation caused by a surge in AD
14 of 80
Cost-push Inflation
Inflation caused by an increase in cost of production
15 of 80
Money Supply
Quantity of money in the economy
16 of 80
In employment
People who are either working for firms or other organisations or are self employed
17 of 80
Unemployment
People who are economically active but are not in employment
18 of 80
Economically Inactive
Those people of working age who are not looking for work, for a variety of reasons
19 of 80
Workforce
People who are economically active either in employment or unemployment
20 of 80
Claimant Count survey
The number of people claiming the Jobseeker’s allowance each month
21 of 80
ILO Unemployment rate
A measure of the percentage of the workforce who are without jobs , but are available for work, willing to work and looking for work
22 of 80
Underemployment
Where an individual is employed in a second-choice occupation or is only able to work part-time but would like to work full-time
23 of 80
Frictional Unemployment
Unemployment associated with people who are between jobs
24 of 80
Structural Unemployment
Unemployment arising because of changes in the industrial organisation of the economy
25 of 80
Cyclical Unemployment
Unemployment that arises during the downturn of economic activity within an economy
26 of 80
Demand-deficient Unemployment
Unemployment that arises because of a deficiency of aggregate demand in the economy, so that the equilibrium level of output is below full employment
27 of 80
Seasonal Unemployment
Unemployment that arises in seasons of the year when demand is relatively low
28 of 80
Voluntary Unemployment
Situation arising when an individual chooses not to accept a job at the going wage rate
29 of 80
Balance of Payments
A set of accounts showing the transactions conducted between residents of a country & the rest of the world
30 of 80
Current account
Record of transactions
31 of 80
Primary Income
Earnings from factors of production (CELL)
32 of 80
Secondary Income
Transfers recorded in the balance of payments
33 of 80
Balance of Trade
Exports - imports
34 of 80
Deficit
Imports greater than exports
35 of 80
Surplus
Exports greater than imports
36 of 80
Exchange Rate
The price of one currency in terms of another
37 of 80
Aggregate Demand
The total amount of spending on goods & services in an economy at a given price level over a set time period
38 of 80
Consumption
Total planned household spending
39 of 80
Disposable Income
Surplus remaining after the payment of necessities
40 of 80
Marginal Propensity to Consume (MPC)
Proportion of additional income devoted to consumption
41 of 80
Marginal Propensity to Save (MPS)
Proportion of additional disposable income devoted to saving
42 of 80
Consumer Confidence
Measure of consumers’ feelings towards the future outlook of the economy
43 of 80
Wealth Effects
When consumer spending is affected by value of stocks
44 of 80
Investment
Expenditure undertaken by firms to add to the capital stock
45 of 80
Keynes 'Animal Spirits'
Human behaviour drives consumer confidence
46 of 80
Government Expenditure
All government consumption & investment
47 of 80
Net Trade
Exports - imports
48 of 80
Exports
Goods sold to other countries
49 of 80
Imports
Goods brought from other countries
50 of 80
Aggregate Supply
The total output of goods produced in the economy at a given price level over a set period of time
51 of 80
Short-Run
Level of capital is fixed
52 of 80
Long-Run
All factors of production are variable
53 of 80
Circular Flow of Income
A model of the economy which shows the movement of goods & services between households & firms & their corresponding payments
54 of 80
Income
A flow concept - amount of money earned over time
55 of 80
Wealth
A stock concept - the accumulation of assets eg. property, shares
56 of 80
Withdrawls
Where money comes out of the circular flow of income as savings, taxes & imports
57 of 80
Injections
Where money is pumped into the circular flow of income as exports, investment & government expenditure
58 of 80
Multiplier
The ratio of a change in equilibrium real income to the autonomous change that brought it about; 1/MPW
59 of 80
Marginal Propensity to Withdraw (MPW)
The proportion of additional income withdrawn from the circular flow (MPT+MPS+MPI)
60 of 80
Marginal Propensity to Import (MPM)
The proportion of additional income spent on imports of goods & services
61 of 80
Marginal Propensity to Tax (MPT)
The proportion of additional income taxed
62 of 80
Economic Growth
An increase in the long run productive capacity of an economy
63 of 80
Business Cycle
A phenomenon whereby GDP fluctuates around its underlying trend based on the state of the economy
64 of 80
Positive Output Gap
When actual growth is greater than potential growth
65 of 80
Negative Output Gap
When actual growth is less than potential growth
66 of 80
Recession
Negative economic growth for two consecutive quarters
67 of 80
Productivity
Measure of the efficiency of a factor of production
68 of 80
Depreciation
Fall in the value of physical capital equipment over time
69 of 80
Phillips Curve
Empirical relationship suggesting there is a trade-off between inflation & unemployment
70 of 80
Fiscal Policy
Decisions made by a government on its expenditure & taxation
71 of 80
Expansionary
Used to stimulate AD & boost economy
72 of 80
Contractionary
Used to control AD & prevent a crash
73 of 80
Taxation
Charges paid to governments
74 of 80
Monetary Policy
Decisions made by the Central Bank regarding interest rates & money supply
75 of 80
Interest Rates
Portion of loan charged to borrower
76 of 80
Quantitative Easing
The introduction of new money into the money supply
77 of 80
Supply-Side Policies
A range of measures intended to have a direct impact on AS (increasing productive potential)
78 of 80
Interventionist Policies
Focus on the need for government intervention to achieve a goal
79 of 80
Market Based Policies
Focus on power of free market, minimal government intervention
80 of 80

Other cards in this set

Card 2

Front

Increase in the long run productive capacity of an economy

Back

Economic growth

Card 3

Front

A measure of economic activity carried out in the domestic economy over a period of time

Back

Preview of the back of card 3

Card 4

Front

GDP plus net income from abroad

Back

Preview of the back of card 4

Card 5

Front

Real GDP/population

Back

Preview of the back of card 5
View more cards

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all The UK economy- performance and policies resources »