Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

IB Economics > Macroeconomics > Flashcards

Macroeconomics Flashcards

1
Q

Macroeconomics

A

The study of the economy as a whole, including inflation, growth, unemployment and distribution of income in the whole economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Investment

A

An explanation that is the addition of capital stock to the economy or expenditure by firms on capital. It is a component of the GDP=C+I+G+(X-M). Be aware of the different definition for bank investments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Inflation

A

An explanation that is a sustained or continuous increase in the general or average level of prices over a period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Demand curve

A

Is a graphical representation of the law of demand. It is(usually) a downward-sloping curve (or line) illustrating the inverse relationship between price and quantity demanded.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Durable goods

A

Goods which are consumed over a long period of time, such as a television set or a car.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Absolute poverty

A

Absolute poverty exists when individuals do not have the resources to be able to consume sufficient necessities to survive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Aggregate demand

A

the total of all demands and expenditures on final goods in the economy at a given time and price level. It is composed of C for consumption, G for government expenditure, I for investments and NX for net exports (X-M)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Aggregate demand curve

A

Shows the relationship between the average price level and equilibrium national income. As the price level rises the equilibrium level of national income falls

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Aggregate supply curve

A

Shows the relationship between the average level of prices in the economy and the level of total output.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Ad Valorem Tax

A

Tax levied as a percentage of the value of the good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Aggregate Supply

A

The total amount of goods and services that all the firms in all the industries in a country will produce at various price levels in a given period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Barrier to exit

A

Barrier to exit - factors which make it difficult or impossible for firms to cease production and leave an industry.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Barriers to entry

A

Factors which make it difficult or impossible for firms to enter an industry and compete with existing producers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Consumption

A

Total expenditure by households on goods and services over a period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Business or economic or trade cycle

A

Regular fluctuations in the level of economic activity around the productive potential of the economy. In business cycles, the economy veers from recession, when it is operating well below its productive potential, to booms when it is likely to be at or even above its productive potential. The four phases are recession, depression, recover and boom.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Allocative or economic efficiency

A

Occurs when resources are distributed in such a way that no consumers could be made better off without other consumers becoming worse off.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Aggregate

A

The collective amount, sum or total.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Bank Base Rate

A

The interest rate which a bank sets to determine its borrowing and lending rates. It offers interest rates below its base rate to customers who deposit funds with it, whilst charging interest rates above base rate to borrowers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

National income

A

The value of the output, expenditure or income of an economy over a period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Circular flow of income

A

A model of the economy which shows the flow of money, goods, services and factors of production as well as their payments around the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Deflation

A

Deflation is a general decline of prices, often caused by a reduction of supply of money or credit. Can also be caused by a decrease in government, personal, or investment spending.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Closed economy

A

An economy where there is no foreign trade.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Bottleneck

A

A supply side constraint in a particular market in an economy which prevents higher growth for the whole economy. It is usually caused by a limitation of a section of the productive system. For example: If a country has a record production of tomatoes, but the number of trucks that would be available to transport this production is not enough to take all the tomatoes, this could be a bottleneck for the production and export of the tomatoes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Active or discretionary fiscal policy

A

the deliberate manipulation of government expenditure and taxes to influence the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Monetary policy

A

the attempt by government or a central bank to manipulate the money supply, the supply of credit, interest rates or any other monetary variables, to achieve the fulfilment of policy goals such as price stability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Depression

A

a period when there is a particularly deep and long fall in output.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Workforce jobs

A

The number of workers in employment. It excludes the unemployed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Base period

A

The period, such as a year or a month, with which all other values in a series are compared.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Laissez-faire

A

A doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Expansionary fiscal policy

A

Fiscal policy used to increase aggregate demand.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Creeping inflation

A

small rises in the price level over a long period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Factors of production

A

The inputs to the production process: land, which is all natural resources; labour, which is the workforce; capital, which is the stock of manufactured resources used in the production of goods and services; entrepreneurs, individuals who seek out profitable opportunities for production and take risks in attempting to exploit these.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Inflationary Gap

A

Its an output gap where the actual GDP exceeds potential full employment GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Capital-output ratio

A

the ratio between the amount of capital needed to produce a given quantity of goods and the level of output.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Command or planned economy

A

an economic system where government, through a planning process, allocates resources in society

36
Q

Average propensity to consume

A

The proportion of total income spent. It is calculated by C ÷ Y.

37
Q

Boom

A

Period of time when the economy is growing strongly and is operating around its productive potential.

38
Q

Indirect tax

A

a tax levied on goods or services, such as value added tax or excise duties.

39
Q

Progressive, regressive and proportional taxes

A

taxes where the proportion of income paid in tax rises, falls or remains the same respectively as income rises.

40
Q

Real GDP

A

GDP evaluated at the market prices of a base year e.g. if 1990 was a base year then the real GDP for 1995 would be calculated by taking the quantities of goods and services of 1995 and multiplying them by their respective 1990 prices. It measures the value of a nation’s output in a period of time adjusted for any inflation or deflation the economy has experienced. Equals the nominal GDP divided by the GDP deflator price index

41
Q

Nominal GDP

A

GDP evaluated at a current market price. it is GDP that includes all the changes in market price that occurred due to inflation/deflation. Can increase either as a result of an increase in real output or an increase in the price level.

42
Q

Per capita GDP

A

the GDP of a country divided by the amount of people in the country to find the GDP per person.

43
Q

Bank base rate

A

the interest rate which a bank sets to determine its borrowing and lending rates. It offers interest rates below its base rate to customers who deposit funds with it, whilst charging interest rates above base rate to borrowers.

44
Q

Base period

A

the period, such as a year or a month, with which all other values in a series are compared.

45
Q

Budget

A

a statement of the spending and income plans of an individual, firm or government. The Budget is the yearly statement on government spending and taxation plans in the UK.

46
Q

Budget deficit

A

a deficit which arises because government spending is greater than its receipts. Government therefore has to borrow money to finance the difference.

47
Q

Laissez-Faire

A

a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.

48
Q

Cost-benefit analysis

A

a procedure, particularly used by governments to evaluate investment projects, which takes into account social cost and benefits.

49
Q

Current account

A

that part of the balance of payments account where payments for the purchase and sale of goods and services are recorded.

50
Q

Demand management

A

government use of fiscal or other policies to manipulate the level of aggregate demand in the economy.

51
Q

Elastic demand

A

where the price elasticity of demand is greater than 1. The responsiveness of demand is proportionally greater than the change in price. Demand is infinitely elastic if price elasticity of demand is infinity.

52
Q

Cyclical or demand-deficient unemployment

A

when there is insufficient demand in the economy for all workers who wish to work at current wage rates to obtain a job, caused by changes in the business cycle and AD level.

53
Q

Frictional Unemployment

A

when there is unemployment caused by the temporary unemployment for people who are transferring between jobs.

54
Q

Unemployment rate

A

An explanation that is the number of unemployed expressed as a percentage of the workforce. (unemployment rate= number of people unemployed/number of people in the labor force)

55
Q

Structural Unemployment

A

when the pattern of demand and production changes leaving workers unemployed in labour markets where demand has shrunk. Examples of structural unemployment are regional unemployment, sectoral unemployment or technological unemployment.

56
Q

Full employment

A

the level of output in an economy where all factors of production are fully utilised at given factor prices.

57
Q

Seasonal Unemployment

A

when there is unemployment caused by seasonal changes, so the job is dependent on time or only available in sometimes of the year.

58
Q

Equilibrium Wage

A

is a wage rate that doesn’t cause an excess supply of workers and doesn’t cause an excess demand of workers.

59
Q

Economic Goods

A

goods which are scarce because their use has an opportunity cost.

60
Q

Anti-competitive practices or restrictive trade practices

A

Tactics used by producers to restrict competition in the market.

61
Q

Diseconomies of Scale

A

a rise in the long run average costs of production as output rises.

62
Q

Consumer Price Index (CPI)

A

A measure of the price level used across the European Union and used by the Bank of England to measure inflation against its target.

63
Q

Cost-push inflation

A

Inflation caused by increases in the costs of production in the economy

64
Q

Lorenz Curve

A

shows the extent of inequality of income in society

65
Q

Credit Multiplier

A

The number of times a change in reserves assets will change the assets of the banking system and thus the money supply.

66
Q

Current Balance

A

the difference between total exports (visible and invisible) and total imports. It can also be calculated by adding the balance of trade to the balance on invisible trade.

67
Q

Developed and developing or less developed countries

A

developed countries are the rich industrialised nations of Europe, Japan and North America, whilst developing or less developed countries are the other, poorer, less economically developed nations of the world.

68
Q

Human Development Index(HDI)

A

A measure of the standards of living, used to rank countries based on their level of human development. It takes into account three primary variables: the level of GDP per capita, (as an indication of income levels), literacy (as an indication of education levels), and life expectancy (as an indication of levels of health). Countries are placed into one of four categories based on their HDI ranking: “very high human development”, “high human development”, “medium human development” and “low human development”.

69
Q

SHORT RUN AGGREGATE SUPPLY

A

the upward sloping aggregate supply curve which assumes that money wage rates are fixed.

70
Q

Derived demand

A

when the demand for one good is the result of or derived from the demand for another good.

71
Q

Customs union

A

A type of trade bloc which is composed of a free trade area with a common external tariff.

72
Q

RECESSIONARY GAP

A

The difference between an economy’s equilibrium level of output and its full employment level of output when an economy is in recession

73
Q

Fine-tuning

A

The attempt by government to move the economy to a very precise level of unemployment, inflation, etc. It is usually associated with fiscal policy and demand management.

74
Q

Deregulation

A

the process of removing government controls from markets.

75
Q

Demand

A

Is the willingness to consume a product of various prices.

76
Q

Economic Growth

A

Steady growth in the productive capacity of the economy (and so a growth of national income) or the increase of the economic activity of a country within a period of time.

77
Q

Frictional unemployment

A

when workers are unemployed for short lengths of time between jobs

78
Q

Crowding out

A

when an extra pound of government spending leads to a reduction of one pound in private sector spending. Crowding out implies that changes in government spending or taxation will have no long term impact on the level of aggregate demand.

79
Q

Fixed capital

A

Fixed capital refers to any kind of real or physical asset (such as land, buildings, vehicles and equipment) that is not used up in the production of a product. It is in contrast with capital such as raw materials, fuel and labor which are used up. Fixed capital is stays in the business almost permanently.

80
Q

Activity or participation rates

A

the percentage or proportion of any given population in the labour force.

81
Q

Automatic or built-in stabilisers

A

mechanisms which reduce the impact of changes in the economy on national income

82
Q

Core Inflation

A

A measure of inflation that factors out the changes in the prices of products that tend to experience volatile price swings, (e.g. food and energy prices). This gives policy makers a better indication of long term changes in the price level.

83
Q

Homogeneous Goods

A

Goods made by different firms but which are identical

84
Q

Demand or effective demand

A

The quantity purchased of a good at any given price, given that other determinants of demand remain unchanged.

85
Q

Disposable income

A

The amount of money that households have available for spending and saving after income taxes have been accounted for. (Macro) (Yousef.Hinnawi)

86
Q

Central Bank

A

The financial institution in a country or group of countries typically responsible for the printing and issuing of notes and coins, setting short term interest rates, managing the country’s gold and currency reserves and issuing government debt.

IB Economics (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions