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33 Cards in this Set
- Front
- Back
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Inflation |
A sustained rise in the general price level over time.
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Price Stabilty
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The general level of prices is kept constant or grows at an acceptably low rate over time. |
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Rate Of Inflation
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The rate at which the general price level rices over time.
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Consumer Prices Index
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The official measure of the rate of inflation.
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Monetary Inflation
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Inflation caused by growth in the economy's money supply.
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Demand-pull Inflation
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Inflation caused by excess demand in the economy.
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Cost-push Inflation
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Inflation caused by a rise in costs in the economy.
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Hyperinflation
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A rate of inflation so high that the value of money becomes close to worthless.
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Tax
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A compulsory payment to the government. |
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Direct Tax
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A tax on income or wealth.
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Indirect Tax
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A tax on spending, often defined as a tax on goods and services.
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External Cost
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The negative impact of an economic transaction on a party who is not directly involved in the transaction. For example, manufacturing that causes air pollution. (A negative impact is an external cost or negative externality; a positive impact is an external benefit or positive externality.) |
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Demerit Cost
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a good or service whose consumption is considered un healthy or undesierable due to its bad effects on the consumers. It is over-consumed if left to market forces. Examples include tobacco, alcohol, recreational drugs, gambling and junk food.
Demerit goods give rise to negative externalities; merit goods give rise to positive externalities. |
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Distribution Of Income
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How incomes are shared out among the people of the country. |
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Redistribution Of Income
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A policy to reduce the inequalities of income so that incomes are distrubuted more evenly.
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Inequalities Of Income
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Incomes are distributed unevenly so some people have a much higher income than others.
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Transfer Payments
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Benefits to citizens which are paid out of tax revenue.
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Regressive
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A regressive tax takes the same proportion of income from lower incomes, or takes a smaller percentage of a higher income. |
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Proportional
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A proportional tax takes the same proportion of income from all income levels.
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Progressive
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A progressive tax takes a greater proportion of income from higher incomes, or takes a smaller percentage of a lower income. |
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Market Failure
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When the market (through demand and supply) fails to allocate resources in the best interests of society as a whole. |
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Fiscal Policy
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A policy that uses taxation and government spending to try to achieve the objectives of the government. |
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Balanced Budget
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Government spending is equal to tax revenue. |
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Budget Deflict
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Government spending is greater than tax revenue.
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Budget Surplus
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Tax revenue is greater than government spending.
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Multiplier Effect
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A process by which an original change in incomes in the economy leads to a total change in incomes which is a multiple of the original change. |
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Money
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Anything that is generally acceptable as a medium of exchange. |
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Banks And Building Societies
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Financial institutions that accept deposites and make loans. |
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Interest Rate
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The reward for saving and the cost of borrowing.
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Monetary Policy
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A policy aimed at affecting the total supply of money in the economy.
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Interest Rate Policy
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The use of interest rates to try to achieve the government's economic objectives.
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Bank Rate
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The interest rate set by the Bank of England, which affects all interest rates in the economy (also called the base rate).
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Supply-side Policies
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Policies that increase the ability of the economy to supply more goods and services. |
