AS macro Key Words Flashcards
What’s aggregate demand
The total demand for a country’s goods and services at a given price level and in a given time period
What’s the AD formula
AD = C + I + G + (X - M)
What’s X - M
Exports - imports, its the net trade and so net exports
What’s consumption/ consumer expenditure
Spending by households on consumer products
What’s the largest component of AD
Consumption
What’s investment
Spending on capital goods
What’s government expenditure
Spending by the central government and local government on goods and services
This is health, education, and the police service
What does government expenditure not include
Transfer payments (housing benefit, job seekers allowance and state pensions)/ an increase in job seekers allowance would be reflected in consumption as the increase in benefits will create an increase in disposable income that would be spent on goods or services
What are transfer payments
Money transferred from one person or group to another not in return for any good or service
What’s jobs seekers allowance
A benefit paid by the government to those unemployed and trying to find a job
What are exports
Products sold abroad
What are imports
Products bought from abroad
What’s a trade surplus
The value of exports exceeding the value of imports
What’s a trade deficit
The value of imports exceeding the value of exports
UK has a trade Defecit
What’s real GDP
The country’s output measured in constant prices and so adjusted for inflation.
