1
When government spending is greater than tax revenues
What is a budget deficit?
All other things being equal
What is the meaning of ceteris paribus?
What are injections?
The difference between how much the buyer is willing to pay for a good and what they actually pay
What is a consumer surplus?
This is the term used to describe the increase in the total output of an economy over time
What is economic growth?
Any branch of academic study or science that deals with human behaviour in its social and cultural aspects
What is a social science?
The father of modern economics
Who is Adam Smith?
This occurs when there is an optimal distribution of goods and services, taking into account consumer's preferences
What is allocative efficiency?
Signalling, incentive, rationing, allocative
What are the (four) functions of price?
It measures the change in the price of a basket of goods and services consumed by households in the UK
What is the Consumer Price Index (CPI)?
Population, income tax, fashion & trends, advertising, income, price of complements, price of substitutes
What are the conditions of demand?
A good that is not fully non-rival and/or where it is possible to exclude people from consuming the product
What is a quasi-public good?
Low unemployment, high inflation, no/low spare capacity
What are the features/characteristics of the negative output gap?
This central bank policy tool involves changing the amount of money in circulation or adjusting interest rates to manage economic activity, such as controlling inflation or stimulating growth
What is monetary policy?
When a 10% increase in the price of a product results in a 5% decrease in the quantity demanded, the demand is considered to be this type of elasticity
What is inelastic demand?
This economic policy involves the government providing direct payments to certain sectors or individuals in an effort to achieve economic stability or reduce inequality
What is a subsidy?
A metaphor for the unseen forces that move the free market economy
What is the invisible hand?
This type of market structure is characterized by a single firm that controls the entire market supply of a product or service, with high barriers to entry and significant price-setting power
What is a monopoly?
This type of inflation is caused by increased demand for goods and services in the economy, which outpaces the ability of supply to meet that demand
What is demand-pull inflation?
When wages are set above the equilibrium level causing the supply of labour to be greater than demand
What is real-wage unemployment?
Automatic fiscal changes as the economy moves through different stages of the business cycle
What are automatic (fiscal) stabilisers?
This is the process by which the forces of supply and demand interact to determine the price and quantity of goods and services in a market economy
What is the price mechanism?
The father of macroeconomics
Who is (John Maynard) Keynes?
This term describes the distribution of income among individuals and households in an economy, and it is typically measured by indicators such as the Gini coefficient or income quintiles
What is income inequality?
The number of times that one unit of currency is used to purchase goods and services within a given time period
What is the velocity of money?