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16 Cards in this Set
- Front
- Back
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Actual & Potential Growth |
AG: Increase in an economy's level of output/real GDP over time PG: Increase in productive capacity of the economy Productive Capacity: maximum output the economy is capable of producing given availble resources and state of technology |
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Sustainble & Inclusive Growth |
S: Growth that is maintained without creating other significant economic problems I: Growth that is distributed fairly across society and creates opportunities for all (productive employment) |
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Unemployment, Full employment & Natural Rate of UnN |
UnN: People in the labour force who are willing and able to work, but are unable to find employment Full N: There are enough jobs to match the number of job seekers in the economy Natural rate of UnN: rate of UnN during full N due to frictional and structural UnN |
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DD-deficient UnN, Structural UnN, Frictional UnN |
DD-deficient: decrease in AD, thus firms cannot sell at current output and start accumulating stocks, leading to decrease in pdn and hence retrenchment Structural UnN: skills mismatch between job seekers and available jobs Frictional UnN: time associated with finding a job |
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Price Stability, Inflation & Deflation |
Px Stability: GPL in an economy increases at a low, stable and expected rate Inflation/Deflation: sustained increase/decrease in GPL of an economy over time |
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Consumer Price Index |
Average level of prices of a basket of goods and services consumed by a typical household |
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Headline/Core Inflation |
Headline inflation: total inflation including volatile pxs Core inflation: total inflation excluding volatile pxs Volatile pxs may differ for different countries |
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Disinflation & Stagflation |
Disinflation: Positive and decreasing inflation rate Stagflation: a combination of an increase in GPL and a decrease in output and increase in UnN Due to cost-push inflation |
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DD-pull inflation & cost-push inflation |
DD-pull: Excessive AD in an economy that outpaces AS, leading to an increase in GPL with little to no increase in output
Cost-push: Decrease in SRAS due to persistent increase in COP, for reasons not associated with increases in AD, leading to increase in GPL |
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Price Elasticity of Demand & Supply |
PED: degree of responsiveness of the quantity of a good demanded to a change in its own price, CP PES: degree of responsiveness of the quantity of a good supplied go a change in its own price, CP |
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Income and Cross Elasticity of Demand |
YED: degree of responsiveness of the demand of a good to a change in the income of consumers, CP CED: degree of responsiveness of the demand of one good to a change in prices of another good, CP |
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Consumer and Producer Surplus |
Consumer Surplus: the difference between what consumers are willing and able to pay and what they are actually charged for it Producer Surplus: the difference between the actual price charged and the price which the producer is willing and able to put up for sale |
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Public Goods: Non-Excludability and Non-Rivalry |
Non-excludable: Impossible or prohibitively expensive to exclude non-payers from consuming the good Non-rivalrous: Consumption of a good by one consumer does not reduce its availability to another consumer |
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GDP, GNI |
GDP: Market value of all final GnS newly produced within the geographical boundary of an economy in a given period of tine GNI: Market value of all final GnS newly produced anywhere in the world from resources belonging to the resident sof a country in a given period of time |
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Real vs Nominal GDP |
Real GDP: GDP at constant prices, with effects of price changes removed Nominal GDP: GDP at current/prevailing market prices |
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Succinct Multiplier Effect |
An injection will generate income for individuals employed by firms producing GnS. These individuals will spend a portion of their additional income on domestic consumption based on their MPC and the rest as withdrawals such as savings, taxes or on imports.The additional consumption generates additional income for those employed in other industries, and thus they increase their domestic consumption as well. This cycle repeats until total withdrawals equal total initial injections. The total increase in income is k times the initial injection and k is known as the multiplier |
