Economics - Definitions - Unit 2

Front 1

Real Values

Back 1

Values that have been adjusted to remove the effects of inflation. The effects are removed using an index number.

Front 2

Nominal Values

Back 2

Values that are measured in money terms. Unadjusted current values.

Front 3

Inflation

Back 3

A general and sustained increase in prices, measured by a change in weighted index of prices such as the CPI

Front 4

Deflation

Back 4

A fall in the general level of prices

Front 5

Disinflation

Back 5

A fall in the rate of inflation

Front 6

Demand-Pull Inflation

Back 6

An increase in the general level of prices caused by increased consumption, investment, government spending or net exports

Front 7

Cost-Push Inflation

Back 7

An increase in the general level of prices caused by increased production costs such as a rise in wages or a fall in the exchange rate

Front 8

Money Supply

Back 8

The amount of spending power in an economy

Front 9

Workforce

Back 9

A measure of people of working age who are willing and able to work

Front 10

Claimant Count

Back 10

A measure of unemployment using the number of claimants of JSA

Front 11

Labour Force Survey

Back 11

A measure of unemployment of those out of work in the last 4 weeks and ready to start in r the next 2 weeks

Front 12

Underemployment

Back 12

A situation in which a worker is employed but wants to work more hours

Front 13

Unemployment

Back 13

A situation in which someone is willing and able to work, but who is not currently employed

Front 14

Inactivity

Back 14

A measure of people of working age who are either unwilling or unable to work

Front 15

Real Wage Unemployment

Back 15

A measure of people who are I'm willing to work at the going wage rate. Classical economist believe that are kept artificially above the market clearing wage and main cause of unemployment

Front 16

Cyclical Unemployment

Back 16

Caused by a lack of aggregate demand in an economy

Front 17

Structural Unemployment

Back 17

A measure of workers who lose jobs in a declining industry and do not have the skills to join other industries

Front 18

Frictional Unemployment

Back 18

A measure of people who are between jobs

Front 19

Seasonal Unemployment

Back 19

A measure of people that only have jobs at certain times of the year

Front 20

Investment Income

Back 20

The reward for investments in other countries

Front 21

Current Transfers

Back 21

The payment of money across international boundaries that has no corresponding output

Front 22

Current Account Surplus

Back 22

Where inflows on the current account of the balance of payments are greater than outflows

Front 23

Current Account Deficit

Back 23

Where outflows on the current account of the balance of payments are greater than inflows

Front 24

Aggregate Demand

Back 24

The total planned expenditure on goods and services produced in the UK

Front 25

Aggregate Supply

Back 25

The total planned output of goods and services in the UK

Front 26

Animal Spirits

Back 26

The forces that make markets move in large booms and busts, add people buy and sell impulsively rather than calmly, using purely rational behaviour

Front 27

Trade Cycle

Back 27

The pattern of economic growth which changes from booms to recessions or slow growth in a fairly regular pattern

Front 28

Fiscal Policy

Back 28

The deliberate manipulation of government spending and taxation in order to influence the level of AD in the economy

Front 29

Bottlenecks

Back 29

Where restrictions in the capacity to increase production occur, meaning that process will start to rise as output rises

Front 30

Wealth Effect

Back 30

The effect on incomes or spending when at values change

Front 31

Injections

Back 31

Flows into the circular flow of income

Front 32

Withdrawals

Back 32

Flows out of the circular flow of income

Front 33

Marginal Propensity to Withdraw

Back 33

A measure of how much of any extra pounds earned is saved, taxed or spent on imports

Front 34

Marginal Propensity to Consume

Back 34

A measure of how muxh of any extra pound earned is spent wiring the economy

Front 35

Output Gap

Back 35

The difference between actual and potential GDP or growth in GDP

Front 36

Quantitative Easing

Back 36

The purchase of gilts and other illiquid assets as a means of making credit easier to access

Front 37

Budget Deficit

Back 37

The amount by which government spending exceeds revenues

Front 38

Budget Surplus

Back 38

The amount by which tax revenues exceed government spending.

Front 39

Deregulation

Back 39

The process of reducing government rules and restrictions on businesses

Front 40

Philips Curve

Back 40

An observation of a trade-off between unemployment and inflation

Front 41

Trade-off

Back 41

When one factor can only improve at the expense of another

Front 42

Fiscal Stance

Back 42

The position that the government takes on fiscal policy