Economics Unit 1.4 government and the macroeconomy 낱말 카드 | Quizlet

Local government

Gov. organisation with the authority to administer a range of policies within an area of the country

Natural monopoly

Industry where a single firm can produce at a lower average cost than two or more firms because of the existence of significant economies of scale

Strategic industries

industries are important for the economic development and safety of the country

National champions

Industries that are, or have the potential to be, world leaders

Trade blocs

regional group of countries that remove trade restriction between them

Free international trade

the exchange of goods and services between countries without any restrictions

Economic growth

an increase in the output of an economy in the long run, an increase in the economy's productive potential

Actual economic growth

increase in real GDP

Potential economic growth

Increase in the output of an economy

Aggregate demand

The total demand for a country's product at a given price level and in a given time period

Aggregate supply

the total amount of goods and services that domestic firms are willing to supply at a given price level

Full Employment

the lowest level of unemployment possible

Economically active

being a member of the labour force

Unemployment rate

the percentage of the labor force that is unemployed

Price stability

the price level in the economy not changing significantly over time

Inflation rate

percentage increase in the price level of goods and services over time

Balance of payment

record of a country's economic transactions with other countries

Budget

relationship between gov. revenue and gov. spending

Budget deficit

gov. spending > gov. revenue

Budget surplus

gov. revenue > gov. spending

national debt

total amount the gov. has borrowed over time

Multiplier effect

final impact on aggregate demand being greater than initial change

Direct taxes

Taxes on income and wealth

Indirect taxes

taxes on expenditure

progressive tax

one which takes a larger percentage of the income or wealth of the rich

Proportional tax

one which takes the same percentage of the income or wealth of all taxpayers

regressive tax

One which takes a larger percentage of the income or wealth of the poor

Automatic stabilisers

forms of gov.

inflation

rise in the price level of goods and services over time

Informal economy

part of the economy that is not regulated, protected or taxed by the gov.

flat taxes

taxes with a single rate

fiscal policy

decision on gov.spending and taxation designed to influence aggregate demand

Expansionary Fiscal Policy

rises gov.expenditure and cuts in taxation designed to increase aggregate demand

contractionary fiscal policy

cuts in gov. expenditure and rises in taxation designed to reduce aggregate demand

Monetary policy

decisions on the money supply, the rate of interest and the exchange rate taken to influence aggregate demand

Foreign exchange rate

the price of one currency in terms of another currency or currencies

Expansionary monetary policy

increases in the money supply and the reduction in the rate of interest designed to increase aggregate demand

contractionary monetary policy

cuts in the money supply or growth of money supply and rises in the rate of interest designed to reduce aggregate demand

supply side policy

measures designed to increase aggregate supply

Deregulation

the removal of rules and regulations

Gross Domestic Product (GDP)

total output of a country

circular flow of income

movement of expenditure, income and output around the economy

value added

the diff between the sales revenue received and the cost of raw materials used

Transfer payments

transfers of income from one group to another not in return for providing a good or service

Normal GDP

GDP at current market prices an so not adjusted for inflation

Real GDP

GDP at constant prices and so adjusted for inflatioin

Subsistence agricultrue

output agricultural goods for farmers' personal use

Recession

reduction in real GDP over a period of six months or more

Subsistence agriculture

Economic growth that doesn't endanger the country's ability to grow in the future

Employment

being involved in a productive activity for whcih a payment is received

Unemployment

being without a job while willing and able to work

Claimant count

measure of unemployment which counts as unemployed these in receipt of unemployment benefits

Labour force survey (ILO) Measure

a measure of unemployment which counts as unemployed people who identify as such in a survey

Frictional unemployment

temporary unemployment arising from workers being in between jobs

structural unemployment

Unemployment caused by the long-term decline of an industry

cyclical unemployment

unemployment caused by a lack of aggregate demand

Search unemployment

unemployment caused by a fall in demand at particular times of the year

Casual unemployment

unemployment arising from workers regularly being between periods of employment

seasonal unemployment

unemployment caused by a fall in demand at particular times of the year

regional unemployment

unemployment caused by a decline in job opportunities in a particular area of the country

technological unemployment

unemployment caused by workers being replaced by capital equipment

Deflation

sustained fall in the prices of goods and services

Disinflation

A fall in the rate of inflation

cost-push inflation

rises in the price level casued by excess demand

Demand pull inflation

rises in the price level caused by excess demand

Wage-price spiral

wage rises leading to higher prices, in turn, lead to further wage claims and prices rises

Monetary Inflation

rises in the prices level caused by an excessive growth of the money supply

Hyperinflation

A very rapid rise in the price level

Index-linking

changing payments in line with changes in the inflation rate

Menu costs

costs involved in having to change prices as a result of inflation

Shoe-leather cost

cost involved in moving money around to gain higher interest rates