Flashcards
Economics Unit 2-Keywords
Cards in this deck (34)
- 1What is aggregate demand? What is aggregate supply?Aggregate Demand: total demand in the economy its components are C+I+G+(X-M)
Aggregate Supply: total value of goods and services supplied in the economy - 2What is Economic Growth? What is GDP?Economic Growth: the capacity of t he economy to produce more goods and services overtime
GDP: the total value of goods and services produced in the economy - 3What is a negative output gap? What is a positive output gap?Negative output gap: where the economy is producing less than its trend output
Positive output gap: when actual GDP exceeds trend GDP increasing inflationary pressure - 4What is a Trade-off?Trade-off: where one macroeconomic objective has to be curtailed in favor of another objective
- 5What are Imports? What are Exports?Imports: goods or services purchased from abroad
Exports: goods or services sold abroad - 6What is meant by employment? What is meant by unemployment?Employment: where labour is actively engaged in a productive activity usually in exchange of payments
Unemployment: those without a job but who are currently seeking work at current wage rates - 7Name the five types of unemployment?Cyclical unemployment
Demand deficient unemployment
Frictional unemployment
Structural unemployment
Voluntary unemployment - 8Cyclical unemployment: demand deficient unemployment that occurs as a result of the economic cycle Demand deficient unemployment: insufficient AD in the economy to employ labourFrictional unemployment: people between jobs
Structural unemployment: unemployment caused by change in the demand side or supply side of the economy
Voluntary unemployment: workers who are not prepared to take jobs at current wage levels - 9What are economic indicators?Economic indicators: economic statistics that provide information about the expansion and contraction of business cycles
- 10What is the pattern that the economic cycle goes through?Boom, Recession, Slump and Recovery
- 11What is a recession? What is balance of payments?Recession: when an economy is growing at less than its long-term trend rate of growth
Balance of payments: exports minus imports- a deficit means more is imported than exported - 12What are injections? What are withdrawals? Name a type of withdrawal and a type of injectionInjections: money that originates outside the circular flow and is added to it
Withdrawals: any money not passed on in the circular flow and is taken out of it
investment and Saving - 13Savings are income induced, what does this mean? What is a multiplier effect?Income induced: will increase as income increases and vice versa
Multiplier effect: where and increase or decrease in spending leads to a larger than proportionate change in the national income - 14What is the accelerator effect?Accelerator effect: the relation between the change in new investment and the rate of change of national income
- 15What is privatisation? What is a supply-side shock?Privatisation: sale of government owned assets to the private sector
Supply-side shock: something that will increase or reduce the costs hence supply-side of all firms in the economy - 16What are the macroeconomic policy objectives?Full employment
Economic growth
Control of inflation
Balance of payments - 17What are the macroeconomic policy instruments?Monetary policy
Fiscal policy
Supply-side policy - 18What is a boom/bust policy? What does total factor productivity mean?Boom/bust policy: the government using macroeconomic tools to stimulate then contract the economy
Total factor productivity: the overall productivity of inputs used by a firm in producing a particular level of output - 19What is inflation? What is deflation? What is a credit crunch?Inflation: A persistent increase in the price level
Deflation: A persistent decrease in the price level
Credit crunch: where borrowing becomes more expensive or unavailable - 20What is the trend rate of growth in the UK? What is participation rate?UK trend rate : 2.5%
Participation rate: proportion of the country's labour force - 21What is demand pull inflation? What is cost push inflation?Demand pull inflation: where AD exceeds AS leading to and increase in the price level
Cost push inflation: where increased cost of production result in firms increasing their prices leading to a rise in the price level - 22What is meant by "Tight labour market"?Tight labour market: where firms have to increase wages to attract the labour they need
- 23The current account is divided into 4 parts what are they?Trade in goods
Trade in services
Investment income
Current transfers - 24What does Visibles and Invisibles mean in economics?Visibles: exports or imports that you can see and touch as they cross international boundaries
Invisibles: intangibles such as the provision of insurance or banking services - 25What is deindustrialisation? What is globalization?Deindustrialisation: a fall in the proportion of N.O. accounted for by the manufacturing sector of the economy
Globalization: the ability to produce goods anywhere in the world and sell them in any country - 26What happens when the current account is in equilibrium?When the current account is in equilibrium it does not affect the macroeconomy of the country
- 27What is monetary policy?Monetary policy: controlling the macroeconomy via changes in monetary variables such as the money supply or interest rates
- 28What is interest rate What is the transmission mechanism of monetary policy?Interest rate: the cost of borrowing the reward for saving
Transmission mechanism of monetary policy: how changes in the base interest rate influence the components of AD - 29What do changes in interest rates impact?Housing market,Mortgage payers,Demand for credit,Consumer and Business confidence,Business investment, Exchange rate
- 30What is meant by money supply? What are exchange rates?Money supply: the total amount of money in an economy
Exchange rate: the price at which one currency exchanges for another - 31What is meant by Narrow money, Broad money and Hot moneyNarrow money:balances available for normal transactions
Broad money:money that is not immediately accessible
Hot money: money that is liable to rapid transfer from one country to another - 32What is fiscal policy?Fiscal policy: the policy of the government regarding taxation and government expenditure
- 33What is current spending? What is capital spending?Current spending: government spending on a day to day basis
Capital spending: government spending to improve productive capcity - 34What is a balanced budget, a budget deficit and a budget surplus?Balanced budget: receipts equal expenditure
Budget deficit: expenditure exceed receipts
Budget surplus: receipts exceed expenditure
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- Flashcards on Economics Unit 2-Keywords, created by Ami7991 on 14/05/2014.
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