Macroeconomic

Index numbers

A means by which the percentage change year on year can be understood as numbers are expressed in terms of a base year value of 100.

The Claimant Count

A measure of unemployment using records of those formally registered as entitled to unemployment benefits.

Recession

A period of falling real GDP i.e. negative economic growth, for a period of 6 months or more.

Balance of payments

A record of the value of exports of goods & services set against the value of imported goods & services.

Shortfall

A shortage of particular products, services or factors of production. This is associated with demand-pull inflation.

The circular flow of income

A simplified representation showing how households& firms interact. It links the demand for goods & services, production, the demand for factors, and incomes.

Unemployed

A situation of being willing and able to work, but not having a job at current wage rates.

Inflation

A sustained / persistent rise in the general price level over a period of time, usually a year.

Deflation

A sustained fall in the general price level.

Progressive tax

A tax which takes proportionately more from HIGHER income earners.

Regressive tax

A tax which takes proportionately more from LOWER income earners.

Technology

A variable that can influence the productive capacity of the economy.

The Labour Force Survey

A wider measure of unemployment based on surveys that include those that have been seeking work in the last four weeks but who are not necessarily entitled to welfare benefits.

Real GDP

After the effects of inflation have been accounted for. (i.e. at constant prices)

RPI

An index of price changes that DOES include expenditure of owner occupied housing costs.

CPI

An index of retail price changes that excludes the prices of "owner occupied housing costs"

Savings(CF)

Any income (money) not passed on in the circular flow. It has the effect of reducing national income/output/expenditure.

Taxes

Any income (money) not passed on in the circular flow. It has the effect of reducing national income/output/expenditure.

Nominal GDP

Before the effects of inflation have been accounted for. (i.e. at current prices)

Inflation

Changes in the prices of goods & services that people spend more on are given more importance than those on which they spend only a small amount.

Consumer confidence

Consumers' perceptions of their future well-being.

Involuntary unemployment

Demand deficient unemployment due to fluctuations in the economic cycle leading to a fall in demand for labour due to insufficient AD.

Sustainable economic growth

Economic growth that does not endanger future generations' ability to expand productive capacity.

National statistics

Economic statistics that provide information about the expansions & contractions of economic cycles.

Visibles

Exports or imports that are tangible, that you can see & touch as they cross international boundaries.

Expansionary stance

Fiscal policies that may automatically reduce fluctuations in economic activity associated with the economic cycle. E.g. Rising JSA as unemployment rises & tax revenue falls.

GDP per person

GDP divided by the population in a given country.

Imports

Goods and services purchased from abroad.

Exports

Goods and services sold to people living outside a country / economy.

Factors of production

Goods that are used to produce other goods & services.

Governmental polcies

Government use of taxation & its own expenditure to influence macroeconomic variables & achieve its macroeconomic objectives.

Net Income

Income available to households after the payment of income tax and national insurance

Invisibles

Intangibles such as the provision of insurance or banking services.

Macro economics

Issues such as unemployment, inflation, economic growth and the balance of payments. These are concepts which affect the whole economy.

Investments (CF)

Money that originates outside the circular flow and so will increase national income/output/expenditure.

Frictional unemployment

Short term unemployment associated with people between jobs.

Purchase of capital

Spending by firms on buildings, machinery & improving the skills of the labour force in order to increase productive capacity.

GDP growth

The (positive) percentage change in GDP over a given period of time - usually a year and an increase in the economy's productive potential over time.

Economic growth

The averaged out rate of growth over a period of time.

The accelerator effect

The change in the level of investment in new capital goods caused by a change in national income or output. The size of the accelerator depends on the economy's capital - output ratio.

Stakeholders

The collective term for the owners of the factors of production

National Deficit/surplus

The difference between government spending & taxation.

PPB

The economy's productive capacity at a given point in time.

Government economic objectives

The goals or targets that the government wishes to achieve or hit.

Government Policies

The means by which the government tries to achieve their targets.

Consumption

The percentage of any change in income that is spent on the consumption of goods & services.

Savings

The proportion of disposable income that is saved.

Expenditure

The total (planned) spending by households on goods & services.

AD

The total demand for goods & services within an economy. (sometimes also defined as the total planned expenditure in an economy. (C+I+G+X-M)

GDP

The total value of goods & services produced within an economy in a given period of time.

External Factors

Those external events which are likely to affect the demand for goods & services from a given economy.

Economicaly Inactive

Those of working age who have chosen not to do paid work or look for paid work. E.g. students, houseworkers.

Structural unemployment

Unemployment due to a fall in demand for labour related to the long term decline of particular industries.

Total Visible Balance of payments

Visible exports minus visible imports. I.e. The difference between the trade in goods account & the trade in services account in the balance of payments on current account.

Positive BoP

When the value of exported goods is greater than the value of imported goods.

Negative BoP

When the value of exported goods is less than the value of imported goods.

Demand Pull inflation

Where AD exceeds AS leading to an increase in the level of prices.

Positive output gap

Where actual GDP exceeds trend GDP increasing inflationary pressure.

The multiplier effect

Where an increase or decrease in AD leads to a greater than proportional change in national income / output.

Credit Crunch

Where borrowing becomes more expensive or unavailable.

Public surplus

Where government receipts (revenue) exceed government spending in a financial year (Public Sector Debt Repayment - PSDR)

Balanced Budget

Where government spending equals government receipts in a financial year.

Public debt

Where government spending exceeds government receipts in a financial year. (Public Sector Net Cash Requirement - PSNCR)

Cost push inflation

Where increased costs of production result in firms raising their prices which leads to an increase in the general price level.

Employment

Where labour is actively engaged in a productive activity usually in exchange for payments such as wages.

Frictional unemployment

Where people are between jobs

Negative output gap

Where the economy is producing at less than its trend output.