Macro Definitions

A measure of the price level based on the prices of a collection of goods and services that are designed to reflect the consumption basket of the average consumer

The ratio of personal saving to household disposable income

A tax on consumption, which is paid to the tax authorities by the seller on behalf of the consumer

The rate of growth of GDP over a period of time

The total amount of spending on goods and services produced in an economy during a period of time

The relationship between the legel of AD and the overall price level. It shows planned expenditure at any given possible overall price level

Effects by which government expenditure adjusts to offset the effects of recession and boom without the need for active intervention

The proportion of income that households devote to consumption

A set of accounts showing the transactions conducted between residents of a country and the rest of the world

The interest rate that is set by the monetary policy committee of the Bank of England in order to influence inflation

A phenomenon whereby GDP fluctuates around its underlying trend, following a regular pattern.

A measure of output per unit capital

A model of the economy which shoes the movement of goods and services between households and firms and their corresponding payments in money terms

The number of people claiming the job seekers allowance each month

Total planned household spending

The relationship between consumption and disposable income; its position depends on the other factos that affect how much households spend on consumption

Inflation initiated by an increase in the costs faced by firms, arising on the supply side

A process by which an increase in government ependiture crowds out private secotor activity by raising the cost of borrowing

Unemployment thatarises during the downturn of an economic cycle such as recession

A fall in the average level of prices (negative inflation)

Unemployment that arises because of low of aggregate demand, so that the equilibrium is below full employment

Inflation initiated by an increase in aggregate demand

A fall in the physical capital equipment over time as it is subjected to wear and tear

People who have been unable to find employment so are no longer looking for work

A fall in the rate of inflation

The income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments

Those people of working age who are not looking for work

The price of one currency in terms of another

A strategy for achieving rapid economic growth through the promotion of export activity

Decisions made by the government on its expenditure, taxation and borrowing

Unemployment associated with job search

People who are between jobs

A situation where people who are economically active in the workforce are willing and able to work at going wage rates are able to find employment

The average level of GNI per head of population

The balance between government expenditure and revenue

A measure of the economic activity carried out in the domestic economy over a period of time

GDP plus net income from abroad

the stock of skills and expertise that contribute to a workers productivity.

it can be increased through education and training

A measure of the percentage of the workforce who are without jobs,looking for jobs and are available, willing and able to work

People who are either working for firms or self employed

A flow concept - the amount of income that is earned during a period

A device for comparing the value of a variable in one period with a base observation

for example CPI measures the average level of prices relative to a base year

The rate of increase in the average price level in an economy

Where money flows into the circular flow in the form of investment, government spending and exports

Policies by which the government intervenes to stimulate aggregate supply

Expenditure undertaken by firms to add to the capital stock

Situation arising when an an individual would like to accept a job at the going wage rate but is unable to find employment

A group of economists who belived that the macro-economy could settle at an equilibrium that was below full employment

A measure of output per worker

or output per hour worked

the study of the interrelationships between economic variables at an aggregate level

The proportion of additional income devoted to consumption

The proportion of additional income that is spent on imports of goods and services

The proportion of an increase in disposale income that households would devote to saving

The proportion of additional income that is taxed

The proportion of additional income that is withdrawn through the circular flow -- The sum of the marginal propensities to save, import and tax

Policies that rely on allowing markets to work more freely and providing incentives for enterprise and initiative

A group of economists who belied that the macro-economy always adjusts rapidly to the full employment level of output and that monetary policy should be the prime instrument for stabilising the economy

the decisions made by government regarding monetary variables such as the money supply or interest rate

The body within the Bank of England responsible for the conduct of monetary policy

The quantity of money in the economy

The ratio of a change in equilibrium real income to the autonomous change that brought it about; it is defined as 1/the marginal propensity to withdraw

the long-run equilibrium level of output to which monetarists believe the macroeconomic will always trend

The unemployment that will exist when the economy is in long run equilibrium

Gross investment minus depreciation

The value of an economic variable based on current prices, taking no account of changing prices through time

The difference between real GDP and potential real GDP

an empirical relationship suggesting theat there is a tradeoff between unemployment and inflation

An expansion in the productive capacity of the economy

A measure of the efficiency of a factor of production

A process by which liquidity in the economy is increased when the Bank of England purchases assets from commercial banks using virtual money

The value of an economic variable adjusted for inflation

Occurs when GDP falls for two or more consecutive quarters

A measure of the average level of prices in the UK

Unemployment that arises in seasons of the year when demand is relatively low

A curve showing how much output firms would be prepared to supply in the short run at any given overall price level

A situation describing an economy in which both unemployment and inflation are high at the same time

Unemployment arising because of changes in the pattern of economic activity within an economy

A range of measures intended to have direct impact on Aggregate supply, and specifically the potential capacity output of the economy

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

The average productivity of all factors measured as the total output divided by the total amount of inputs used

The process by which a change in the bank rate affects inflation

Where an individual is employed in a second choice occupation, or is only able to work part time but would like to work full time

People who are economically active but are not in employment

Situation arising where an individual chooses not to accept a job at the going wage rate

Where money flows out of the circular flow in the form of savings, taxation and imports

A stock concept, the accumulation of assets such as property or shares

People who are economically active - either in employment or unemployed

Economic growth

Reduction in unemployment

Control of inflation

Equilibrium in the BoP current account

Balanced government budget

Protection of the environment

Equal distribution of income

The ability to produce a good more efficiently

eg with less labour

The situation of a household is insufficient to allow it to purchase the minimum bundle of goods and services regarded as necessary for survival

A rise in the exchange rate within a floating exchange rate system

A process by which government expenditure and revenue varies with the business cycle, thereby helping to stabilise the economy without any intervention from the government

An institution that acts as a bank for central banks and sets standards for regulation of banks that are accepted globally

The rate of interest charged by the BoE on short term loans to banks

Brazil

Russia

India

China

Portugal

Ireland

Italy

Greece

Spain

Notes and coins in circulation and as commercial banks deposits in the Bank of England, plus sterling wholesale and retail deposits with monetary financial institutions

A scheme intended to stabilise the price of a commodity by buying excess supply in periods when supply is high and selling when supply is low

Notes and coins in circulation and as commercial banks deposits in the Bank of England

An account identifying transactions in physical capital between the residents of a country and the rest of the world

the ratio of a banks capital to its current liabilities and risk weighted assets

The banker to the government

implement monetary policy

banker to the banks

Lender of last resort

Regulation of the banking industry

Set of trading agreements in which a group of countries:

Remove barriers of trade amongst each other

Adopt a common set of barriers against external trade

establish common tax rates

common laws regulating economic activity

free movement of factors of production between members

The ability to produce a good relatively more efficiently

eg lower opportunity cost

A process by which an increase in money supply can have a muliplied effect n the amount of credit in an economy

A process by which a decrease in government expenditure lowers the cost of borrowing

A process by which a government expenditure raises the cost of borrowing

An account identifying transactions in goods and services between the residents of a country and the rest of the world, together with income payments and international transfers

A group of countries that agree to trade without barriers between them, with a common tariff barrier against the rest of the world

A process through which countries pass through on the way to becoming developed:

Improved health lowers death rate, leading to a lower birth rate, creating low and stable population growth

A fall in the exchange rate within a floating exchange rate system

A process whereby a government reduced the price of its currency relative to an agreed rate in terms of foreign currency

A process by which real per capita incomes are increased and the inhabitents of a country are able to benefit from improved living condition

A tax levied directly on income

A set of trading arrangements the same as a common market, but also having a common currency and common monetary policy

TEconomies that have experienced rapid economic growth with some industialisation and charactaristics of developed markets

A system that was set up by a group of European countries with the objective of keeping member counties currencies relatively stable against each other

A situation in which economic growth is achieved through the exploitation of economies of scale, made possible by focusing on exports reaching a wider market than would be available within a domestic economy

A scheme set up to ensure that small producers in LDC's receive a fair price for their products

An account identifying transactions in financial assets between the residents of a country and the rest of the world

A regulator seperate from the bank of engand responsible for conduct regulation of financial services firms

Institutions such as banks and building societies that channel funds from lenders to borrowers

The decision making body of the bank of England responsible for macro-prudential regulation

A situation in which there is a sufficient and efficient flow of liquidity in the economy

a that occurs when governments spend more than they receive in tax

A system n which the government of a country agrees to fix the value of its currency in terms of that of another currency

A system in which the exchange rate is permitted to find its own level in the market

Investment undertaken in one country by companies based in other countries

A situation in which an LDC is unable to import the goods hat it needs for development because of a shortage of foreign exchange

Stocks of foreign currency and gold owned by the central bank of a country to enable it to meet any mismatch between the demand and supply of the countries currency

A group of countries hat agree to trade between themselves

Have individual barriers with countries outside the area

A market in which it is possible to buy a commodity at a fixed price for delivery at a specified future date.

Also exists in markets for foreign exchange

The precursor to the WTO.

Organised rounds of tariff reductions

A measure of the degree of inequality in a society

A process by which the worlds economies are becoming more closely integrated

A rule stating that over he economic cycle net government borrowing will be for investment only and not current spending

The difference between government expendature and government revenue

spending by the government on goods and services

A model of economic growth that emphasises the importance of savings and investment

Rate of GDP growth = savings ratio / capital output ratio

Increased factor incomes

Increase in savings

increase in investment

larger capital stock

raise in real gdp/gni

An initiative launched in 1995 to provide debt relief for heavily indebted poor countries

Stocks of funds that are moved around the world from country to country in search of the best return

hot money chases high interest rates around the world

A composite indicator of the level of a countries development, between 0 and 1

A tax on expendature

A process of transforming an economy by expaning manufacturing and other industrial activity

The complex of physical capital goods needed to support development in the form of roads, communications networks, market, education and healthcare facilities ect

Borrowing and lending between banks to manage their liquidity and other requirements for short term funds

The international monetary fund

A multilateral institution that provides short term financing for countries experiencing balance of payments problems

A strategy for stimulating development that focuses on addressing market failure

Trade in services

A measure of output per worker per hour

A theory arguing that there may be gains from trade arising when countries specialise in the production of goods or services in which they have a comparative advantage

The central bank guaranteeing sufficient liquidity is available in the monetary system

A model arguing that less developed countries could be seen as being typified by two sectors, traditional and modern.

Labour can be transferred from the traditional to the modern sector in order to bring about growth and development

The average rate of interest n interbank lending in the london interbank market

The extent to which an asset can be converted in the short term and without the holder incurring a cost

A theory that suggests people will desire to hold money as an asset

A ratio of liquid assets to total assets

A graphical way of depicting the distribution of income within a country

Financial regulation intended to mitigate the risk of the financial system as a whole

Tax on additional income, defined as

the change in tax payments due/taxable income

The notion that households will be influenced by the rate of interest in making savings decisions, which will then determine the quantity of lonable funds available for fims to borrow for investment

An approach to economic growth in which governments are recommended to intervene less where markets can operate effectively but ti intervene more strongly where markets are seen to fail.

A strategy for encouraging development that relies on enabling markets to work effectively

Schemes that provid finance for small scale projects in LDC's

Financial regulation intended to set standards and supervise financial institutions at the level of the individual firm

Targets set for each less developed country, reflecting a range of development objectives to be monitored each year to evaluate progress

A body within the bank of England responsible for the conduct of monetary policy

A situation in which countries adopt a common currency

A situation in which there is stability in prices relative to the governments inflation target

A company who's production is carried out in a number of countries

the total amount of government debt, based on accumulated previous deficits

The long run equilibrium level of output to which monetarists believe the macro-economy will always tend

The unemployment rate that exists when the economy is in long run equilibrium

Measures imposed by a government that have the effect of inhibiting interantional trade

Aid provided to LDC's by countries in the OECD

Intervention by the central bank to influence short run interest rates by buying or selling securities

A ta in which the marginal tax rate rises with income

baring most heavily on the well-off members of a society

A decision making body in the bank of England responsible for micro-prudential regulation of deposit-takers, insurers and major investment firms

A theory stating that in the long run, exchange rates in a floating rate system are determined by relative inflation rates in different countries

The nominal exchange rate adjusted for difference in relative inflation rates between countries

A tax bearing more heavily on the relatively poorer members of society

The situation if a household falls below half the median adjusted household income

A sale and repurchase agreement, hereby one financial institution sells a financial asset to another with an agreement to buy it back again at an agreed future date

Banks that provide high-street services to depositors

The process when a government raises the price of a domestic currency in terms of a foreign currency

A process where future cash flows are converted into marketable securities

A form of land tenure system in which the landlord and tenant share the crop

Traditional society

the preconditions period

the takeoff

the drive t maturity

the age of mass consumption

Development which meets the needs of the present without compromising the ability of future generations to meet their own needs

A tax imposed on imported goods

The ratio of export prices to import prices

Economies in southeast asia that had rapid economic growth in the 1960's

Hong kong

south korea

singapore

taiwan

The average productivity of all factors

measured as the total output divided by the total amount of inputs used

The replacement of more expensive domestic production or imports with cheaper output from a partner in a trade bloc

The replacement of cheaper imported goods from a less efficient trading partner within a bloc

Shows the consumption possibilities under conditions of free trade

Occur when the government provides benefits to poor households

A process by which a multinational corporation can minimise its global tax liability by manipulating the internal prices for transactions between its branches in different countries

Banks that can operate in both retail and wholesale markets

The rate at which money changes hands

the volume of transactions divided by money stock

Trade in goods

An agreement by a country to limit its exports to another country to a given quantity or quota

Banks that deal with companies and other banks on a large scale

A multilateral organisation that provides financing for long term development projects

A multilateral body responsible for overseeing the conduct of international trade