AS Macro economics AQA key words

question

Ceteris paribus

answer

Holding all other factors in the coming constant

question

Free market economics

answer

Neo-classical economics. Economy is self adjusting, with the market mechanism automatically bringing about full employment and economic growth

question

Keynesian economics

answer

Justify government intervention in the economy to achieve the governments macroeconomic objectives

question

Recession

answer

Two consecutive quarters of negative economic growth

question

Fiscal policy

answer

The use of gov spending and taxation to achieve the governments policy objectives

question

Monetary policy

answer

The use of interest rates to achieve the governments policy objectives

question

Monetarism

answer

The belief that inflation is assumed to be caused by excessive growth of the money supply, monetary policy should be used to control its growth

question

Supply side economics

answer

Government policy should be used to improve the competitiveness and efficiency of markets

question

Policy instrument

answer

Tool or set of tools used to try to achieve a policy objective

question

Policy objective

answer

A target or goal that policy makers aim to hit

question

Policy conflict

answer

Occurs when two policy objectives cannot both be achieved at the same time: the better the performance in achieving one objective the worse the performance of achieving the other

question

Economic growth

answer

An increase in the economies potential level of real output, and an outward movement of the PPF

question

National income or national output

answer

The flow of new output produced by the economy in a particular period

question

Economic cycle

answer

Fluctuation of real output above and below the trend line of economic growth

question

Policy indicator

answer

Provides information about what is happening in the economy

question

Output gap

answer

Difference between actual output and the trend growth level of output

question

Aggregate demand

answer

Total planned spending on real output produced within the economy

question

Consumption

answer

Total planned spending on real output by households produced within the economy

question

Investment

answer

Total planned spending by firms on real output produced within the economy

question

Saving

answer

Income which is not spent

question

Interest rate

answer

Reward for lending savings to somebody else. Also the cost of borrowing

question

Wealth

answer

The stock of assets or things that have value, which people own

question

Technical progress

answer

Improvements in methods of production resulting from invention, innovation and research and development. It often leads to the production of new types of better quality goods

question

Accelerator

answer

The change in the level of investment in new capital goods induced by a change in national income or output

question

Equilibrium national income

answer

Level of income at which withdrawals from the circular flow of income equal injections into the flow

question

Aggregate supply

answer

The level of real national output that producers are prepared to supply at different average price levels

question

Inflation

answer

A persistent or continuing rise in the average price level

question

Reflation

answer

An increase in the level of real output following an increase in AD

question

Claimant account

answer

Method of measuring unemployment according to those people who are claiming unemployment related benefits

question

Labour force survey

answer

Quarterly sample survey of households in the UK. It's purpose is to provide info on the UK labour market. The survey seeks information on respondents' personal circumstances and their labour market status during a period of 1-4 weeks

question

Beveridge Full employment

answer

3% or less of the labour force is unemployed

question

Free market full employment

answer

Level of employment occurring in the market-clearing real wage rate at which the number of workers employers wish to hire equals the number of workers wanting to work

question

Frictional unemployment

answer

Voluntary unemployment. Occurs when workers switch between jobs

question

Structural unemployment

answer

Caused by structural changes in the economy

question

Cyclical unemployment (demand deficient)

answer

Caused by a lack of AD in the economy

question

Seasonal unemployment

answer

Caused by factors such as weather and the end of the Christmas shopping period

question

Demand-pull inflation

answer

A rising price level caused by an increase in AD

question

Cost-push inflation

answer

A rising price level caused by an increase in the cost of production

question

Current account

answer

Part of the balance of payments measuring income currency flows (exports and imports)

question

Investment income

answer

Profit and interest income flowing into a county that is generated from assets that residents of the county own abroad

question

Transfers

answer

Payments flowing between countries in forms such as foreign aid, grants and gifts

question

Balance of trade in goods (balance of visible trade)

answer

Part of the current account measuring export and imports of goods

question

Current account deficit

answer

When imports exceed exports

question

Current account surplus

answer

When exports exceed imports

question

Liquidity

answer

Measures the ease with which assets can be turned into cash quickly and at a pre-known rate or price. Cash is the most liquid asset

question

Mortgage

answer

Long term loan to a house owner that is secured by the property

question

Lender of last resort function

answer

Bank of E's willingness to lend cash to commercial banks to increase their liquidity and to maintain confidence in the banking system

question

Money supply

answer

Stock of money in the economy, that mainly takes the form of cash and bank deposits

question

Balanced budget

answer

When government spending equals government revenue

question

Budget deficit

answer

When gov spending exceeds gov revenue

question

Budget surplus

answer

When gov revenue exceeds gov spending

question

Deficit financing

answer

Means deliberately running a budget deficit and borrowing to finance the deficit

question

Demand- side fiscal policy

answer

Used to increase or decrease the level of AD. Need to be done when operating below PPF.

question

Expansionary fiscal policy

answer

Uses fiscal policy to increase AD

question

Contractionary fiscal policy

answer

Uses fiscal policy to decrease AD

question

Government spending multiplier

answer

Relationship between the chance in government spending and the resulting change in national income

question

Investment multiplier

answer

Relationship between the change in investment and the resulting change in national income

question

National income multiplier

answer

Relationship between the change in AD and the result change in national income

question

Tax multiplier

answer

Relationship between a change in taxation and the resulting change in national income

question

Crowding out

answer

A situation in which an increase in gov or public sector spending displaced private sector spending, with little to no increase in AD

question

Discretionary fiscal policy

answer

Involves making discrete changes to G, T and the budget deficit to manage and 'fine tune' the level of AD

question

Supply side fiscal policy

answer

Used to increase the economy's ability to produce and supply goods, through creating incentives to work, save, invest and to be entrepreneurial

question

National debt

answer

Stock of all past gov borrowing that has not been paid back

question

Transfers

answer

Part of gov spending in which tax revenues are paid to propel such as pensioners, without any output being produced in return

question

Supply-side policies

answer

Focus on the role of tax cuts in increasing personal incentives

1 of 65

question

Ceteris paribus

answer

Holding all other factors in the coming constant

question

Free market economics

answer

Neo-classical economics. Economy is self adjusting, with the market mechanism automatically bringing about full employment and economic growth

question

Keynesian economics

answer

Justify government intervention in the economy to achieve the governments macroeconomic objectives

question

Recession

answer

Two consecutive quarters of negative economic growth

question

Fiscal policy

answer

The use of gov spending and taxation to achieve the governments policy objectives

question

Monetary policy

answer

The use of interest rates to achieve the governments policy objectives

question

Monetarism

answer

The belief that inflation is assumed to be caused by excessive growth of the money supply, monetary policy should be used to control its growth

question

Supply side economics

answer

Government policy should be used to improve the competitiveness and efficiency of markets

question

Policy instrument

answer

Tool or set of tools used to try to achieve a policy objective

question

Policy objective

answer

A target or goal that policy makers aim to hit

question

Policy conflict

answer

Occurs when two policy objectives cannot both be achieved at the same time: the better the performance in achieving one objective the worse the performance of achieving the other

question

Economic growth

answer

An increase in the economies potential level of real output, and an outward movement of the PPF

question

National income or national output

answer

The flow of new output produced by the economy in a particular period

question

Economic cycle

answer

Fluctuation of real output above and below the trend line of economic growth

question

Policy indicator

answer

Provides information about what is happening in the economy

question

Output gap

answer

Difference between actual output and the trend growth level of output

question

Aggregate demand

answer

Total planned spending on real output produced within the economy

question

Consumption

answer

Total planned spending on real output by households produced within the economy

question

Investment

answer

Total planned spending by firms on real output produced within the economy

question

Saving

answer

Income which is not spent

question

Interest rate

answer

Reward for lending savings to somebody else. Also the cost of borrowing

question

Wealth

answer

The stock of assets or things that have value, which people own

question

Technical progress

answer

Improvements in methods of production resulting from invention, innovation and research and development. It often leads to the production of new types of better quality goods

question

Accelerator

answer

The change in the level of investment in new capital goods induced by a change in national income or output

question

Equilibrium national income

answer

Level of income at which withdrawals from the circular flow of income equal injections into the flow

question

Aggregate supply

answer

The level of real national output that producers are prepared to supply at different average price levels

question

Inflation

answer

A persistent or continuing rise in the average price level

question

Reflation

answer

An increase in the level of real output following an increase in AD

question

Claimant account

answer

Method of measuring unemployment according to those people who are claiming unemployment related benefits

question

Labour force survey

answer

question

Beveridge Full employment

answer

3% or less of the labour force is unemployed

question

Free market full employment

answer

Level of employment occurring in the market-clearing real wage rate at which the number of workers employers wish to hire equals the number of workers wanting to work

question

Frictional unemployment

answer

Voluntary unemployment. Occurs when workers switch between jobs

question

Structural unemployment

answer

Caused by structural changes in the economy

question

Cyclical unemployment (demand deficient)

answer

Caused by a lack of AD in the economy

question

Seasonal unemployment

answer

Caused by factors such as weather and the end of the Christmas shopping period

question

Demand-pull inflation

answer

A rising price level caused by an increase in AD

question

Cost-push inflation

answer

A rising price level caused by an increase in the cost of production

question

Current account

answer

Part of the balance of payments measuring income currency flows (exports and imports)

question

Investment income

answer

Profit and interest income flowing into a county that is generated from assets that residents of the county own abroad

question

Transfers

answer

Payments flowing between countries in forms such as foreign aid, grants and gifts

question

Balance of trade in goods (balance of visible trade)

answer

Part of the current account measuring export and imports of goods

question

Current account deficit

answer

When imports exceed exports

question

Current account surplus

answer

When exports exceed imports

question

Liquidity

answer

Measures the ease with which assets can be turned into cash quickly and at a pre-known rate or price. Cash is the most liquid asset

question

Mortgage

answer

Long term loan to a house owner that is secured by the property

question

Lender of last resort function

answer

Bank of E's willingness to lend cash to commercial banks to increase their liquidity and to maintain confidence in the banking system

question

Money supply

answer

Stock of money in the economy, that mainly takes the form of cash and bank deposits

question

Balanced budget

answer

When government spending equals government revenue

question

Budget deficit

answer

When gov spending exceeds gov revenue

question

Budget surplus

answer

When gov revenue exceeds gov spending

question

Deficit financing

answer

Means deliberately running a budget deficit and borrowing to finance the deficit

question

Demand- side fiscal policy

answer

Used to increase or decrease the level of AD. Need to be done when operating below PPF.

question

Expansionary fiscal policy

answer

Uses fiscal policy to increase AD

question

Contractionary fiscal policy

answer

Uses fiscal policy to decrease AD

question

Government spending multiplier

answer

Relationship between the chance in government spending and the resulting change in national income

question

Investment multiplier

answer

Relationship between the change in investment and the resulting change in national income

question

National income multiplier

answer

Relationship between the change in AD and the result change in national income

question

Tax multiplier

answer

Relationship between a change in taxation and the resulting change in national income

question

Crowding out

answer

A situation in which an increase in gov or public sector spending displaced private sector spending, with little to no increase in AD

question

Discretionary fiscal policy

answer

Involves making discrete changes to G, T and the budget deficit to manage and 'fine tune' the level of AD

question

Supply side fiscal policy

answer

Used to increase the economy's ability to produce and supply goods, through creating incentives to work, save, invest and to be entrepreneurial

question

National debt

answer

Stock of all past gov borrowing that has not been paid back

question

Transfers

answer

Part of gov spending in which tax revenues are paid to propel such as pensioners, without any output being produced in return

question

Supply-side policies

answer

Focus on the role of tax cuts in increasing personal incentives

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