Save
Economics
Key terms
Macro economics
Save
Share
Learn
Content
Leaderboard
Learn
Created by
Max Ivinson
Visit profile
Cards (60)
What does the term "macroeconomy" refer to?
The economy in
aggregate
, the sum of all individual markets.
What are the four main macroeconomic objectives of government?
Strong and sustained economic growth (higher
GDP
)
Low
unemployment
Low and stable
inflation
Satisfactory trade position
What does GDP stand for?
Gross Domestic Product
.
How is GDP defined?
The value of all output generated in the
domestic
economy over a given time
period
.
What does GNP stand for?
Gross
National
Product.
How is GNP calculated?
GDP
plus net property income from
abroad
.
What is property income from abroad?
Income derived from ownership of
assets
in other countries.
What does economic growth refer to?
The increase in
GDP
over a given
time period
.
How is inflation defined?
The sustained increase in the
general price level
of an
economy
.
What is unemployment?
Unemployment consists of those of
working age
actively seeking work but without a job.
What is the current account of the balance of payments?
A record of international income and expenditure for
economic agents
over a given period.
What are 'visibles' in the current account?
Entries
relating to
trade
in
goods.
What is primary income?
Interest
,
profit
, and
dividends
generated by investments abroad.
What is secondary income?
International transfers, such as
remittances
made by
migrant workers
.
What are 'invisibles' in the current account?
Entries relating to trade in
services
and
primary
and
secondary
income.
What is real GDP?
The value of GDP adjusted to remove the effects of
inflation
.
How is nominal GDP defined?
The value of GDP without adjustment for
inflation
.
What is real GDP per capita?
Real GDP
divided by
population
.
What does an index represent?
All values relative to a
base
, which is given the value
100
.
What is a weighted index?
A
composite index
adjusted for the relative importance of its
components
.
What does CPI stand for?
Consumer Price Index
.
What is the RPI?
The
Retail Price Index
, an alternative weighted price index.
What is RPIX?
The
RPI
excluding
mortgage
interest
payments.
What is core inflation?
The
inflation rate
excluding sectors with volatile prices, like food and
energy
.
What is the Claimant Count?
A measure of unemployment based on those claiming
Job Seeker’s Allowance
.
What is the ILO measure?
The
International Labour Organisation’s
measure of unemployment based on survey data.
How are living standards usually measured?
Using
real GDP per capita
.
What are PPP exchange rates?
Exchange rates that give equal spending power when converting currencies.
What is the circular flow of income?
A model of the economy
Households supply
factors of production
to firms
Firms provide goods and services to households
Consumer expenditure returns to households as
factor income
What are injections in the circular flow?
Sources of expenditure from outside the flow, such as
investment
,
government expenditure
, and
exports
.
What are withdrawals in the circular flow?
Income received by
households
not returned to firms as
consumer expenditure
.
What is the national income identity?
Income is
identical
to output is identical to expenditure.
What is aggregate demand?
The total demand for
goods and services
produced in an economy over a given period.
What is the formula for aggregate demand?
AD
=
C
+
I
+
G
+
X
-
M
.
What does
consumption
(C) refer to?
Expenditure
by
households
on
goods
and
services.
What is disposable income?
Income after
tax
and
benefits
.
What is discretionary income?
Income left after providing for
basic needs
and commitments.
What is the marginal propensity to consume (MPC)?
The proportion of each additional
£
of income which is consumed.
What is the life-cycle hypothesis?
The theory that
consumers
use borrowing and saving to smooth consumption over their lifetimes.
What is the permanent income hypothesis?
Milton Friedman’s
hypothesis that
increases
in income will only be spent if believed to be permanent.
See all 60 cards