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Description
Flashcards by Libby Rose, updated more than 1 year ago
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Created by Libby Rose
over 8 years ago
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| Question | Answer |
| Economic Growth | An increase in real GDP or potential GDP |
| GDP | The total value of output of goods and services produced in a country in one year |
| Nominal GDP | Total value of output at current prices. No adjustment for the effects of inflation. Known as raw data. |
| Inflation | A general and persistent increase in the price level |
| Real GDP | This is GDP at constant prices, adjusting GDP to take into account the effects of inflation. Known as adjusted data. |
| Recession | 2 consecutive quarters of negative economic growth. |
| Economic Slowdown | A general reduction in a country's economic activity. |
| GDP Per Capita | Total GDP divided by the population |
| GNI | Gross National Income= GDP plus net income from abroad |
| Deflation | A general and persistent decrease in the price level |
| Disinflation | A decrease in the rate of inflation. (Prices are still going up) |
| CPI | Consumers Price index- the measure adopted by the Government for its UK inflation target. The Bank of England is required to achieve a target of 2%. |
| How is CPI calculated? | 1. Annual expenditure survey 2. Monthly price survey |
| RPI | Retail Price index- Takes into account household spending eg. Mortgage payments |
| Basket of goods | A relatively fixed set of consumer products and services valued and used on an annual basis to track inflation in a specific market or country. Used to calculate the CPI. |
| Unemployment | When an individual is willing and able to work but is not currently employed. They must also be economically active. |
| Economically inactive | Not looking for work in any shape or form |
| How is unemployment measured? | 1. ILO 2. Claimant Count |
| ILO | Labour Force Survey (LFS) - Telephone or household survey on 60,000 households. Interviewed 5 times in 3 month intervals. It is internationally recognised. |
| Claimant Count | Monthly count of those claiming unemployment benefit |
| Under-employed | A situation where the worker is employed but wants to work more hours |
| Migration | Movement of a person from one country, of a substance from one medium, or of data from one format, platform, or system, to another. |
| The balance of payments | A record of international payments over the course of one year. |
| What is the balance of payments made up of? | 1. The current account 2. The Capital account |
| Current account | Refers to a country's earnings/spending abroad. |
| Capital account | Refers to the inflow and outflow of funds. |
| 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. |
| What is the balance of trade made up of? | 1. Trade in goods 2. Trade in services |
| Surplus | Earning more than you are spending abroad |
| Deficit | Spending more than you are earning abroad |
| Exports | To send goods or services across national frontiers for the purpose of selling and realizing foreign exchange. Money flows into the country ( a positive '+' sign on the current account) |
| Imports | Products of foreign origin brought into a country. Money flows out of the country ( a negative '-' sign on the current account) |
| Investment income | Capital gains, dividends, interest, and rent generated by investment, and not by trading activities. Also called unearned income, investment income is generally taxable. |
| Current transfers | Refers to the transfers of money either into or out of a country. Transfers where there is no quid pro quo (nothing in return) |
| Appreciation | Increase in the value of an asset which is in excess of the asset's depreciable cost, and is due to economic and other factors (such as scarcity or inflation) and not due to additions or improvements made to it. |
| Depreciation | The decrease in the economic potential of an asset over its productive or useful life. |
| Aggregate Demand | The total planned spending on UK produced goods and services by households, firms, the Government and the foreign sector. |
| Investment (Aggregate demand) | Spending by firms on capital |
| Consumption (Aggregate demand) | Spending by households on consumer goods (60%) |
| Exports (Aggregate demand) | Spending by foreigners on UK produce |
| Imports (Aggregate demand) | Spending by UK on foreign products |
| Government spending (Aggregate demand) | Public sector spending (20%) |
| What is consumption affected by? | 1. Income 2. Interest rates 3. Consumer borrowing 4. Consumer confidence 5. Wealth |
| Disposable income | Gross income of an individual or firm from which direct taxes (such as PAYE, income tax) have been deducted. |
| Discretionary income | Portion of an entity's income available for saving, or spending on non-essentials. It is what remains after expenses for basics (such as food, clothing, shelter, utilities) and prior commitments (such as school fees and loans, interest) are deducted from the disposable income. |
| Consumer confidence | An economic indicator that gauges how consumers interpret the present economic environment and their expectations for the future. |
| Positive wealth effect | This occurs when times of wealth rise in value |
| Negative wealth effect | A reduction in wealth leading to a reduction in consumption. |
| Negative equity | When the value of an asset falls below the outstanding balance on the loan used to purchase that asset. |
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