MACRO

• GDP is the value of national output of goods and services in given time
• real GDP is adjusted for inflation
• Nominal GDP is not adjusted for inflation
• GDP per capita is the GDP divided by the population
• GNI (gross national income) is the total amount of money earned by a nation's people and businesses, both inside and outside the county's border
• GVA ( gross value added) is value of goods and services minus cost of inputs and raw materials / value added by producers to goods and services they have bought
• PPP ( purchasing power parity) is the measure of price of specific goods in different countries and used to compare purchasing power of countries currency
• purchasing power is the value of a currency expressed in a terms of the number of goods or services that one unit of money can buy
• Big Mac Index measures each currency against a common standard, McDonalds big mac
• exchange rates is price of one currency in terms of another
• floating exchange rate is currency set by market based on supply and demand relative to other currencies, no government control
• fixed exchange rate is tying the value of countries currency to another currency
• managed floating exchange rate is where the exchange rate is neither entirely free nor fixed, but is allowed to fluctuate within a range
• free market economy is a system where the government does not interfere with the economy
• happiness economics recognises wellbeing as important measure alongside measures typically used like GDP
• Easterlin paradox is a graph showing the relationship between income and happiness.
• national happiness collects happiness and well being of population to be able to compare internationally
• A boom is a period of rapid economic growth, low unemployment, high demand, high inflationary pressure, high confidence in economy
• A recovery shows a rise of economic growth after a slump, inflation is increasing, unemployment decreasing, confidence increasing
• A recession is a period of economic decline, unemployment increases, confidence low, low investment, inflation falls slightly as not a lot of demand
• A slump is bottom of cycle, represents period of serious economic decline, inflation low, unemployment high, confidence low, high rates of bankruptcy
• double dip recession is a recession followed by economic recovery but back to recession ( no boom)
• Primary income is money from investment or employment
• secondary income is households or countries sharing money (transfers)
• remittance is when people send money from overseas to country of origin
• Inflation is rate of prices increasing / sustained rise in economy's general price level
• Hyper-Inflation is phase of extremely rapid inflation nearly always resulting of mass money printing by government ( money eventually becomes worthless)
• Deflation is when inflation rate is below 0% and is negative
• Disinflation is fall in rate of inflation but not below 0% ( prices don't actually drop but the rate of increase of goods and services slow down)
• Stagflation is slow economic growth, rising unemployment and rising/high inflation
• Shrinkflation is reduction of size or quantity but keeping at same price
• CPI (consumer price index) measures inflation by comparing the price of a fixed basket of goods and services
• CPI is measured monthly and is the main measure we use in the UK
• CPI = current CPI - previous CPI / previous CPI x 100
• RPI (retail price index) is a alternate measure to CPI but doesn't meet international standards and includes a broader range of expenditure than CPI. Also tends to produce a higher inflation rate as includes housing costs and uses a different formula
• Cost-push inflation is type of inflation that occurs when cost of production increases leading to higher prices for goods and services. Determined by supply side factors like an increase in wages, raw materials, and energy costs.
• Wage spiral is a spiral where prices are rising so workers demand higher wages which increases cost for firms so firms increase prices which continues in a spiral
• Demand-pull Inflation is phase of accelerating inflation which arises from rapid growth in AD. Occurs when economic growth is too fast so firms take advantage of an increase of demand and hike up prices to increase profit margins. Typically associated with economic boom.
• money supply is the measure of amount of stock of money in economy
• growth in money supply is in theory, an increase of money supply will increase in real GDP will lead to inflation due to too much money chasing to few goods so firms increase price