Year 1 glossary
Inflation
Consumer price index | A measure of the price level in the economy based on the prices of a collection of products designed to reflect the consumption basket of the average consumer |
Cost push inflation | When prices of goods and services increase due to an increase in production costs |
CPI inflation | Inflation measured by the CPI |
Creeping inflation | Inflation that occurs slowly and gradually |
Deflation | A decline in general prices across the economy, signified by an annual inflation rate below 0% (negative) |
Demand pull inflation | When there is an increase in aggregate demand for a good or service but the supply stays the same or decreases, allowing producers to increase prices |
Disinflation | The fall in the rate of inflation e.g. from 5% to 2%. Prices still rising but at a slower rate |
Inflation | Rise in average prices across an economy |
Inflation expectations | The rate at which consumers and investors expect inflation to rise in the future |
Inflation rate | The annual rate of change of the average price of goods and services |
Inflation targets | Central bank uses monetary tools to estimate the rate of inflation that is appropriate for the economy |
Inflationary pressures | Pressure exerted on the economy that increases price, primarily bringing on inflation |
Money supply | The total amount of money (cash, banks, etc.) in circulation |
Price stability | A goal of monetary and fiscal policy which aims to support sustainable rates of economic activity |
Purchasing power | The amount of products and goods available for purchase with a certain currency unit (exchange rates). Inflation, over time, erodes purchasing power for an economy |
Relative deflation | Used to describe when an economies inflation rate is not nessesarily in negative territory, but is lower than comparative economies. Overtime a relative low rate of inflation can lead to an increase in price competitiveness in international markets (assuming ceteris parabis, other markets stay same) |
Stagflation | Situation where inflation rate is high or rising, the economic growth rate slows, the unemployment remains steadily high |
Unit labour costs | Reflects total labour costs, including social security and the employer’s pension contributions, and including the costs of self-employed labour, incurred in the production of a unit of economic output |
Wage price spiral | Cause and effect relationship between rising wages and prices. when workers receive a wage hike, they demand more goods, in turn causing prices to rise (demand pull inflation) |
Weights (weighted index) | The weights indicate the relative importance of the commodities or items included in the determination of the index |
Employment and Unemployment
Claimant count | A measure of unemployment, in which the number of people claiming job seeker allowance (JSA) is counted |
Cyclical unemployment | Results directly from economic upturns and downturns, typically rises during recessions and declines during economic expansions |
Demand deficient unemployment | Occurs when there is not enough demand for goods and services within an economy, leads to a reduction in production corresponding to a reduction in employment |
Discouraged workers | A person of legal working age who is not actively seeking employment, usually due to the fact that they have given up, hence the name ‘discouraged workers) |
Disguised unemployment | Unemployment that does not affect aggregate economic output. occurs when productivity is low and there are too many workers. it can refer to any part of economy that is not employed at full capacity |
Economically active | People who may be either employed or people who are unemployed but are actively seeking work |
Economically inactive | People who have not been seeking work in the past 4 weeks and will not be in the next two weeks- not actively seeking work |
Frictional unemployment | All the smaller reasons for not going from one job to another, such as location of work, being between jobs |
Full employment | Economic situation where all employment resources are being used in the most efficient way possible. the highest amount of labour that can be employed within an economy at one time |
Human capital | Human capital consists of the knowledge, skills, and health that people invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society. |
Inactivity | People who have not been seeking work in the past 4 weeks and will not be in the next two weeks- not actively seeking work |
International Labour Organisation (ILO) | Deals with labour market issues, for example looking for working opportunities, international labour standards and social protection |
Job search | The act of looking for employment due to unemployment |
Labour force survey | A study of the employment circumstances of the UK population. allows international comparison. shows how many people are willing to work and of those how many are actually working |
Labour shortage | A shortage of people who are readily available for work / unemployed |
Labour supply | The number of hours that people are willing to work and supply at a given wage rate. The labour supply curve for any industry or occupation will be upward sloping. This is because, as wages rise, other workers enter this industry attracted by the incentive of higher rewards. They may have moved from other industries or they may not have previously held a job, such as housewives or the unemployed |
Migration | The movement of people across countries in order to benefit from the other countries economy and economic opportunities |
Natural rate of unemployment | The minimum employment rate resulting from real or voluntary economic forces. it represents the number of people unemployed due to the structure of the labour force such as those replaced by technology or lack the skill to get hired |
NEET’s | |
Net inward migration | |
Real wage | |
Redundancy | |
Seasonal unemployment | Employed in certain seasons such as an ice cream seller or a ski instructor |
Structural unemployment | Industry is in decline therefore not enough job positions (branched banking) |
Tight labour market | In periods of relatively high demand the labour market is said to be ‘tight’. unemployment will be low and there will be many unfulfilled job vacancies |
Under-employment | |
Unemployment rate | |
Unemployment trap | |
Unit wage costs | |
Zero hours contracts |