ECON

• macroeconomics

  involves the study of the whole economy at the aggregate level
• policy objective

  a target or goal that policy-makers aim to 'hit
• short-run economic growth


  Growth of real output resulting from using idle resources, including labour, thereby taking up the slack in the economy
• long-run economic growth

  an increase in the economy's potential level of real output, and an outward shift of the economy's production possibility frontier
• Gross Domestic Product (GDP)


  the sum of all goods and services, or level of output, produced in the economy over a period of time, e.g. one year
• real GDP

  a measure of all the goods and services produced in an economy, adjusted for price changes or inflation. The adjustment transforms changes in nominal GDP, which is measured in money terms, into a measure that reflects changes in the total output of the economy
• nominal GDP

  GDP measured at the current market prices, without removing the effects of inflation
• recession

  a fall in real GDP for 6 months or more
• full employment


  according to Beveridge's definitions, full employment means 3% or less of the labour force unemployed. According to the free-market definition, it is the level of employment occurring at the market-clearing real-wage rate, where the number of workers whom employers wish to hire equals the number of workers wanting to work
• claimant count


  The method of measuring unemployment according to those people who are claiming unemployment-related benefits (Jobseeker's Allowance)
• Labour Force Survey


  a quarterly sample survey of households in the UK. Its purpose is to provide information 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.
• inflation

  a persistent or continuing rise in the average price level
• deflation

  A persistent or continuing fall in the average price level
• disinflation


  When the rate of inflation is falling, but still positive
• price index

  an index number showing the extent to which a price, or a 'basket' of prices, has changed over a month, quarter or year, in comparison with the price(s) in a base year
• consumer prices index (CPI)

  The official measure used to calculate the rate of consumer price inflation in the UK. The CPI calculates the average price increase of a basket of 700 different consumer goods and services.
• retail prices index (RPI)

  the RPI is an older measure used to calculate the rate of consumer price inflation in the UK. Currently, the UK government uses the CPI for the indexation of state pensions and welfare benefits and for setting a monetary policy target, and the RPI for uprating each year the cost of TV and motor vehicle licences, together sometimes with taxes on goods such as alcoholic drinks.
• indexation

  The automatic adjustment of items such as pensions and welfare benefits to changes in the price level, through the use of a price index.
• balance of payments


  A record of all the currency flows into and out of a country in a particular time period
• current account of the balance of payments

  Measures all the currency flows into and out of a country in a particular time period in payment for exports and imports, together with income and transfer flows
• exports


  domestically produced goods and services sold to residents of other countries
• imports

  Goods or services produced in other countries and sold to residents of this country
• balance of trade

  the difference between the money value of a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments on current accounts.
• balance of trade deficit

  the money value of a country's imports exceeds the money value of its exports
• balance of trade surplus

  The money value of a country's exports exceeds the money value of its imports
• balanced budget


  when government spending equals government revenue, which is mostly tax revenue
• budget deficit


  When government spending is greater than government revenue
• policy conflict


  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 in achieving the other.
• trade-off between policy objectives

  Although it may be impossible to achieve two desirable objectives at the same time, e.g. zero inflation and full employment, policy-makers may be able to choose an acceptable combination lying between the extremes, e.g. 2% inflation and 4% unemployment
• recession

  2 consecutive quarters of negative (real) GDP growth
• Keynesian economists


  Followers of the economist John Maynard Keynes, who generally believe that governments should manage the economy, particularly through the use of fiscal policy.
• pro-free market economists

  opponents of Keynesian economists, who dislike government intervention in the economy and who much prefer the operation of free markets
• monetary policy

  the use by the government and its agent, the Bank of England, of interest rates and other monetary instruments to try to achieve the government's policy objectives
• fiscal policy

  the use by the government of government spending and taxation to try to achieve the government's policy objectives
• performance indicator

  Provides information for judging the success or failure of a particular type of government policy such as fiscal policy or monetary policy
• index number

  a number used in an index, such as the consumer prices index, to enable accurate comparisons over time to be made. The base year index number is typically 100. In subsequent years, percentage increases cause the index number to rise above the index number recorded for the previous year, and percentage decreases cause the index number to fall below the index number recorded for the previous year.
• national capital stock

  the stock of capital goods, such as buildings and machinery, in the economy that has accumulated over time and is measured at a point in time
• wealth

  the stock of assets which have value at a point in time, as distinct from income which is a flow generated over a period of time
• national wealth

  the stock of all goods that exist at a point in time that have value in the economy
• national income

  the flow of new output produced by the economy in a particular period (e.g. a year)