8752168
Description
Flashcards by Alex Brownlie, updated more than 1 year ago
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Created by Alex Brownlie
over 8 years ago
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| Question | Answer |
| Accelerator Effect | "When planned capital investment has a positive correlation with the past and expected growth of consumer demand or national income." |
| Aggregate Supply Shock | "Either an inflation shock or a shock to potential national output." |
| Appreciation | "The rise in the market value of one exchange rate against another." |
| Austerity | "Economic policy aimed at reducing a government's deficit." |
| Automatic Stabilisers | "Automatic fiscal changes as the economy moves through stages of the business cycle." |
| Brain Drain | "Movement of highly skilled people from their own country to another nation." |
| BRIC Economies | "Brazil, Russia, India and China. Emerging Markets." |
| Bubble | "When the prices of assets rise sharply at a sustained rate exceeding fundamental valuations, making a sudden collapse likely. (e.g. 2007-08 recession caused by housing market bubble bursting.) |
| Budget Deficit | "When government spending is greater than tax revenues." |
| Capacity Utilisation | "Measures how much of the productive potential of the economy is being used. Falls during a recession, leading to a rise in spare capacity." |
| Capital Market | "A stock or a bond market where firms can raise money for investment purposes." |
| Capital Stock | "Value of the total inventory of capital inputs in the economy." |
| Capital-Labour Substitution | "Replacing workers with machines in a bid to increase productivity and reduce unit cost of production." |
| Claimant Count | "The number of people claiming unemployment-related benefits." |
| Closed Economy | "Economy operating without imports or exports." |
| Comparative Advantage | "The relative advantage that one country holds over another. Countries may benefit in specialising in exporting products for which it has the lowest opportunity cost." |
| Consumer Price Index (CPI) | "Measures the change in price of a weighted basket of consumer goods and services (excluding housing costs.)" |
| Corporation Tax | "Tax on the profits made by companies - 19% in the UK as of April 2017 Budget." |
| Cost-push Inflation | "An increase in the average price level caused by a sustained increase in firms' costs of production." |
| Creeping Inflation | "Small rises in the general price level over a long period." |
| Current Account | "Overall balance of credits minus debits for trade in goods and services, investment income and transfers." |
| Cyclical Trade Deficit | "Trade deficit that arises purely due to changes in the economy's cycle." |
| Cyclical Unemployment | "Unemployment caused by a lack of AD for goods and services. National output smaller than potential output leading to a negative output gap." |
| Deflation | "A sustained fall in the average price level of goods and services in an economy." |
| Depreciation | "A fall in the market value of one exchange rate against another." |
| Depression | "Severe recession where a nation's GDP falls by at least 10%." |
| Deregulation | "Reducing barriers to entry in order to make a market more competitive." |
| Discretionary Fiscal Policy | "Deliberate attempts to affect AD using changes in government spending, taxation and borrowing." |
| Discretionary Income | "Disposable income adjusted for spending on essential bills e.g fuel." |
| Disposable Income | "The value of money coming into a household, minus taxes." |
| Dumping | "When a producer in one country exports a product at a price below that it charges in its home market, or below the costs of supply." |
| Economic Cycle | "Variations in the annual rate of growth of an economy over time." |
| Economic Shocks | "Unpredictable events, such as volatile commodity prices." |
| Expansionary Monetary Policy | "A relaxation of monetary policy means an attempt to use and expansionary monetary policy to boost AD, output and jobs." |
| Expenditure-switching Policies | "Policies aimed at 'switching' expenditure from imports to domestically produced goods in order to improve b.o.p and stimulated GDP growth." |
| Fiscal Deficit | "Occurs when government expenditure is greater than the revenue from tax receipts in a particular year." |
| Fiscal Policy | "Government's ability to affect economic activity through changes in tax and public spending." |
| Foreign Direct Investment (FDI) | "An investment made from one country into another." |
| Free Trade | "When trade is allowed to occur without any form of restriction such as a tariff." |
| G7 | "A group of seven major industrialised countries - Canada, France, Germany, Italy, Japan, the UK and the USA." |
| GDP | "Gross Domestic Product - total value of income/output/expenditure in an economy." |
| Gini Coefficient | "A measure of the extent to which poor households receive less than an equal share of income (income inequality.)" |
| Globalisation | "Deepening of relationships between countries of the world, reflected in increasing levels of overseas trade and investment." |
| Gross National Income (GNI) | "Income generated from the resources owned by inhabitants and businesses of a given country." |
| Hot Money | "Money that flows freely and quickly around the world looking to earn the best rate of return." |
| Human Capital | "Investment in education and training to increase the quality and flexibility of the labour force." |
| Human Development Index (HDI) | "An index to assess comparative levels of development in countries. Quantified in terms of literacy, life expectancy and purchasing power." |
| Income Elasticity of Demand (YED) | "Responsiveness of demand to a change in real income." |
| Inflation | "A sustained increase in the general/average price level for goods and services." |
| Innovation | "Changes to products or production processes. Important in improving dynamic efficiency and quality of goods and services." |
| Investment | "Spending on capital goods - including machinery and infrastructure." |
| Labour Supply | "The number of people able, available and willing to work at a given wage rate." |
| Liquidity | "The ease with which something can be converted to cash with little loss of value." |
| Liquidity Trap | "When very low interest rates have a strong effect on AD." |
| Marginal Propensity to Consume (MPC) | "The proportion of any additional income that is dedicated to spending." |
| Marginal Propensity to Save (MPS) | "The proportion of any additional income that is dedicated to saving." |
| Marginal Rate of Tax | "The rate of tax on the next unit (£1) of income earned." |
| Money Supply | "The entire quantity of a country's commercial bills, coins, loans and credit." |
| Moral Hazard | "When an insured party decides to take higher risks because they believe their losses be covered by someone else." |
| Multiplier Effect | "An initial injection into an economy causing a greater final increase in real GDP." |
| Nationalisation | "Bringing a privately owned asset, such as a company, under state control." |
| Net Trade | "The balance between the value of exports and imports." |
| Nominal GDP | "Monetary value of all goods and services produced expressed at current prices." |
| Output Gap | "Difference between actual and potential national output. A negative output means that an economy has a large margin of spare productive capacity." |
| Paradox of Thrift | "Consumers saving more in a recession reduces consumption and therefore AD. This impedes economic growth and thus lowers the general level of savings." |
| Phillips Curve | "Statistical relationship between unemployment and inflation." |
| Price Stability | "When there is low inflation and the price changes that occur have little effect on consumers' day-to-day decisions." |
| Productive Potential | "Productive capacity of the economy - boosted by high quality investment." |
| Productivity | "Measure of efficiency. How many units of output per worker per hour." |
| Marginal Propensity to Import | "Proportion of any change in income that is spent on overseas products." |
| Marginal Propensity to Save | "Proportion of any change in income that is saved rather than spent." |
| Protectionism | "Restricting trade through tariffs and other forms of import controls." |
| Purchasing Power | "The buying power of a unit of currency. Inversely related to inflation." |
| Quantitative Easing (QE) | "Introduction of new money into national supply by a central bank. Idea is to encourage banks/people to borrow and spend more to offset deflation." |
| Recession | "Two consecutive quarters of negative economic growth." |
| Remittances | "Sending of money to consumers in another economy." |
| Retail Price Index (RPI) | "Similar to CPI however includes housing payments and excludes the top 4% of earners." |
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