Wednesday, September 24, 2014

List of the Most Important Definitions for Chapter 5: Theory and Measurement in the Macroeconomy (CIE-AS)


Keywords for Chapter 5 (AS):

1. Aggregate demand (AD): Total demand for all goods and services produced within the economy over a period of time by the households, firms, government and foreigners

2. Aggregate supply (AS): Total supply of goods and services by all firms within the economy over a period of time

3. Base year: A year chosen so that comparisons can be made over a period of time and it is represented by an index of 100

4. Claimant count: A measure of unemployment which considers the number of people who officially register themselves as unemployed 

5. Consumption (C): Household expenditures onto all goods and services

6. Consumer Price Index (CPI): A way of measuring changes in the prices of a number of goods and services in an economy over a period of time

7. Cost-push inflation: An increase the general price level which is due to rise costs and this can be represented by a leftward shift of AS

8. Economically active: Refers to people who are currently employed or actively seeking for employment

9. Economically inactive: Refers to working age adults (16 and above) who are neither employed nor seeking employment   

10. Demand-pull inflation: An increase in the general price level which is due to rise in total spending into an economy and this can be represented by a rightward shift of the AD curve

11. Dependency ratio: The ratio of dependent people (0-15 and above 65 years old) to those who are economically active

12. Government expenditure (G): Public sector spending onto all goods and services, investment in the form of capital asset and also transfers

13. Investment: An increase in the capital stock such as new plant, building and machines

14. Imported inflation: A sustained increase in the general price level due to increase in the price of imports and this may be due to inflation in other countries or weakness of home currency itself

15. Labour force/ workforce/ working population: Refers to people in a country who are either currently employed or actively seeking for employment

16. Labour Force Survey (LFS): A measure of unemployment which considers a person as unemployed if he/ she has been looking for jobs since the past 4 weeks and are able to start work in the next 2 weeks

17. Labour Force Participation Rate (LFPR): Percentage of the people who are of working age (16 and above) that are economically active (currently employed or actively seeking for employment)

18. Monetary inflation: A sustained increase in the general price level due to rise in money supply which eventually causes total spending to increase at a rate faster than what the whole economy can actually supply

19. Nominal value/ money value: Value of money without taking into account the effect of inflation

20. Net exports (X-M): The difference between the total value of exports and the total value of imports

21. Productivity: Output per worker per period of time

22. Real value: Value of money after netting off the impact of inflation

23. Retail Price Index (RPI): A measure of changes in the prices of a number of goods and services in an economy over a period of time which also includes items that are not included in the CPI such as housing related costs

24. Unemployment: Refers to people of working age (16-60 women and 16-65 men), able and willing to work but are unable to secure a job at the going wage rate

25. Weights: A percentage which is attached to all goods and services in the basket and they are all different to reflect their importance to an average consumer

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