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69 Cards in this Set
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- Back
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Absolute poverty |
Situation describing a household if income is insufficient to allow it to purchase the minimum bundle of goods and services needed for survival |
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Actual economic growth |
The rate of growth of GDP in a period |
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AD curve |
The relationship between the level of aggregate demand and the overall price level; shows planned expenditure at any given possible overall price level; shows planned expenditure at any given possible overall price level |
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Automatic stabilisers |
Effects by which government expenditure adjusts to offset the effects of recession and boom without the need for active intervention |
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Average propensity to consume |
The proportion of income that households devote to consumption |
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Balance of Payments |
A set of accounts showing the transactions conducted between residents of a country and the rest of the world |
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Bank rate |
Interest rate set by the monetary policy committee of the bank of England in order to influence inflation |
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Business cycle |
phenomenon where GDP fluctuates around its underlying trend |
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Capital productivity |
Measure of output per unit of capital |
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Circular flow of income, expenditure and output |
a model of the economy which shows the movement of goods and services between households and firms and their corresponding payments in money terms |
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Claimant count of unemployed |
How many people claiming JSA each month |
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Consumer price index (CPI) |
A measure of the general level of prices in the UK, the rate of change of which has been used as the gov's inflation target since january 2004 |
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Consumption |
Total planned household spending |
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Consumption factor |
relationship between consumption and disposable income; its position depends on the other factors that effect how much households spend on consumption |
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Cost-push inflation |
Increase in the general level of prices initiated by an increase in the costs faced by firms, arising on the supply side |
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Crowding out |
A process by which an increase in gov expenditure crowds out private sector activity by raising the costs of borrowing |
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Demand-deficit unemployment |
Unemployment that arises because of a deficiency of AD in the economy, so that the equilibrium of output is below full employment |
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Demand-pull inflation |
Increase in price level initiated by an increase in AD |
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Depreciation |
The fall in value of physical capital equipment over time as it is subject to wear and tear |
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Disposable income |
The income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments |
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Exchange rate |
the price of one currency in terms of another |
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Fiscal policy |
decisions made by the government on its expenditure, taxation and borrowing to influence the economy |
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Frictional unemployment |
Unemployment associated with job search: that is, people that are between jobs |
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GDP per capita |
the average level of GDP per person |
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GNI per capita |
the average level of GNI per person |
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Government budget deficit (surplus) |
balance between gov expenditure and revenue |
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GDP |
a measure of the value of output of goods and services produced in the economy over a given period, usually a year |
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GNI |
GDP plus net income from abroad |
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human capital |
stock of skills and expertise that contribute to a worker's productivity; cam be increased through education and training |
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HDI |
composite indicator of the country's development, reflecting resources measured by GDP/capita in $PPP terms, education levels measured by mean and expected years of schooling, and longevity measured by life expectancy at birth |
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ILO unemployment rate |
measure of the percentage of the workforce who are without jobs, that want a job, have actively sought work over the past 4 weeks and are able to start work within two weeks |
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Income |
a flow concept- the amount of income that is earned during a period |
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Index number |
a device for comparing the value of a variable in one period or location with a base observation (e.g. the consumer price index measures the average levels of prices relative to a base period) |
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Inflation |
The rate of change of the average price level in an economy |
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Injections |
Where money flows into the circular flow in the form of investment, gov spending and exports |
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investment |
expenditure undertaken by firms to add to the capital stock |
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involuntary unemployment |
situation arising when an individual who would like to accept a job at the going wage rate is unable to find employment |
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Keynesian school |
A group of economics who believed that the macroeconomy could settle at an equilibrium that was below full employment |
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Labor productivity |
A measure of output per worker, or output per hour worked |
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Macroeconomics |
the study of the interrelationships between economic variables at an aggregate (macroeconomic) level |
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Marginal propensity to consume |
Proportion of additional income devoted to consumption |
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Monetarist school |
A group of economists who believed that the macroeconomy always adjusts rapidly to the full employment level of output, and that monetary policy should be the prime instrument for stabilising the economy |
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Monetary policy |
The decisions made by gov regarding monetary variables such as the money supply or the interest rate to manage the economy |
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Monetary Policy Committee |
the body within the bank of England responsible for the conduct of monetary policy |
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Money stock |
quantity of money in the economy |
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Multiplier |
ratio of a change in equilibrium real income to the autonomous change that brought it about; it is defined as 1 divided by the marginal propensity to withdraw |
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Natural rate of output |
Long-run equilibrium level of output to which monetarists believe the macroeconomy will always tend |
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Natural rate of unemployment |
unemployment rate that would exist when the economy is in long-run equilibrium |
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Net investment |
gross investment minus depreciation |
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nominal value |
value of an economic variable based on current prices, taking no account of changing prices through time |
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Output gap |
difference between real GDP and potential real GDP |
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Phillips curve |
Empirical relationship suggesting that there is a trade off between unemployment and inflation |
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Potential economic growth |
expansion in the productive capital of the economy over a period of time, usually a year |
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Productivity |
measure of the efficiency of a factor of production |
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quantitative easing |
process by which liquidity in the economy is increased when the bank of England purchases assets from banks |
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Real value |
Value of an economic variable taking account of changing prices through time |
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Relative poverty |
situation applying to a household whose income falls below 60% of median adjusted household disposable income |
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Retail price index |
measure of the average level of prices in the UK |
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Seasonal unemployment |
unemployment arising from fluctuations in some activities at some period during the year |
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SR AS curve |
curve showing how much output firms would be prepared to supply in the short run at any given overall price level |
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Stagflation |
situation describing an economy in which both unemployment and inflation are high at the same time |
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structural unemployment |
unemployment arising because of changes in the pattern of economic activity within an economy |
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Supply-side policies |
range of measures intended to have a direct impact on AS- and specifically the potential capacity output of the economy |
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Sustainable development |
'development that meets the needs of the present without compromising the ability of future generations to meet their own needs' (Brundtland Commission, 1987) |
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Total factor productivity |
Average productivity of all factors measured as the total output divided b the total amount of inputs used |
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Transmission mechanism of monetary policy |
process by which a change in the bank rate affects inflation |
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Voluntary unemployment |
Situation arising when an individual chooses not to accept a job at the going wage rate |
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Wealth |
a stock concept- the accumulation of assets, such as property or shares |
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Withdrawals |
where money flows out of the circular flow in the form of savings, taxation and inputs |
