Economics definitions: F582

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Current account deficit	When more money is leaving the country than entering it, as a result of sales of its exports, income and current transfers from abroad being less than imports and income and current transfers going abroad
Nominal GDP	Output measured in current prices and so not adjusted for inflation GDP figure x base year price index current year price index
Labour productivity	Output per worker hour
Unemployment rate	The percentage of the labour force who are out of work unemployed x 100% labour force
Claimant count	A measure of unemployment that includes those receiving unemployment related benefits
Average propensity to consume (APC)	The proportion of disposable income that is spent. Consumer expenditure divided by disposable income
Inflation	A sustained rise in the price level
Consumer price index	A measure of changes in the price of a representative basket of consumer goods and services. Differs from the retail prices index (RPI) in methodology and coverage.
Corporation tax	A tax on firms profits
Retail prices index (RPI)	Measures of inflation that is used for adjusting pensions and other benefits to take account of changes in inflation and frequently used in wage negotiations.
Real GDP	The country's output measured in constant prices and measured for inflation
Aggregate Demand	The total demand for a country's goods and services at a given price level and in a given time period
Cyclical unemployment	Unemployment arising from a lack of AD
Gross Domestic Product	The total output of goods and services produced in a country
Price level	The average of each of the prices of all the products produced in an economy
Exchange rate	The price of one one currency in terms of another
Consumer expenditure	Spending by households on consumer products
Structural unemployment	Unemployment caused by the decline of certain industries and occupations due to changes in demand and supply.
Investment	Spending on capital goods
Tariff	Tax on imports
Government spending	Spending by the central government and local government on goods and services
Frictional unemployment	Short term unemployment occurring when workers are in between jobs.
Exports	Products sold abroad
Government bond	A financial asset issued by central or local government as a means of borrowing money
Imports	Products bought from abroad
Net exports	The value of exports minus the value of imports (X - M)
Transfer payments	Money transferred from one person or group to another not in return for any good or service
Job seekers allowance	A benefit paid by the government to those unemployed and trying to find a job
Demand pull inflation	Increases in the price level caused by increases in aggregate demand
Trade surplus Trade deficit	Value of exports > value of imports Value of exports < value of imports
Cost push inflation	Increases in the price level caused by increases in the costs of production.
Rate of interest	The charge for borrowing money and the amount paid for lending money
Hysteresis	Unemployment causing unemployment
Menu costs	The costs of changing prices due to inflation
Shoe leather costs	Costs in terms of the extra time and effort involved in reducing money holdings.
Inflationary noise	The distortion of price signals caused by inflation
Real interest rate	The nominal interest rate - the inflation rate
Fiscal drag	People's income being dragged into higher tax bands as a result of tax brackets not being adjusted in line with inflation
Monetary Policy Committee (MPC)	A committee of the Bank of England with responsibility for setting the interest rate in order to meet the governments inflation target.
Fiscal Policy	The taxation and spending decisions of a government
Monetary policy	Central bank and or government decisions on the rate of interest, money supply and the exchange rate
Aggregate Supply	The total amount that producers in an economy are able and willing to supply at a given price level in a given time period
Privatisation	Transfer of assets from the public to the private sector
Macroeconomic equilibrium	A situation where aggregate demand equals aggregate supply and real GDP is not changing
Supply side policies	Policies designed to increase aggregate supply by improving the efficiency of labour and product markets
Reflationary Deflationary	Of policy measures designed to increase Aggregate Demand Of policy measures designed to reduce Aggregate Demand
Circular flow of income Leakages Injections	The movement of spending and income throughout the economy Withdrawals of possible spending from circular flow of income(taxes, saving, imports) Additions of extra spending into the circular flow of income (investment, exports, government spending)
Discretionary fiscal policy	Deliberate changes in government spending and taxation designed to influence aggregate demand
Automatic stabilisers	Forms of government spending and taxation that change automatically to offset fluctuations in economic activity
Multiplier effect	The process by which any change in a component of aggregate demand results in a greater final change in real GDP.
Overheating	The growth in AD outstripping the growth in AS, resulting in inflation
Progressive tax Regressive tax	A tax that takes a higher percentage from the income of the rich A tax that takes a greater percentage from the income of the poor
Output Gap	The difference between an economy's actual and potential real GDP
Tariff Quota	A tax on imports A limit on imports
Economic growth	In the short run, an increase in real GDP and in the long run an increase in productive capacity that is in the maximum output that the economy can produce
Occupational immobility of labour	Difficulty in moving from one type of job to another
Unemployment	A situation where people are out of work but are able and willing to work
Protectionism	The protection of domestic industries from foreign competition
Labour force	The people who are employed and unemployed, that is, those who are economically active.
Deflation	A sustained fall in the general price level.
Voluntary export restraint	A limit placed on imports from a country with the agreement of that country's government
Balance of payments	A record of money flows coming in and going out of a country
Inflation rate	The percentage increase in the price level over a period of time
Sustainable economic growth	Economic growth that can continue over time and does not endanger future generations ability to expand productive capacity
Full employment	A situation where those wanting and able to work can find employment at the going wage rate.

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Economics definitions: F582

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