Chapter 25: The macroeconomic aims of government Flashcards
Economic growth
An increase in the output of an economy in the long run, an increase in the economy’s productive potential
Actual economic growth
An increase in the output of an economy
Potential economic growth
An increase in an economy’s productive capacity
Aggregate demand
The total demand for a country’s product at a given price level. It consists of consumer expenditure, investment, government spending and net exports (exports - imports)
Aggregate supply
The total amount of goods and services that domestic firms are willing to supply at a given price level
Full employment
The lowest level of unemployment possible
Economically active
Being a member of the labour force
Unemployment rate
The percentage of the labour force who are willing and able to work but are without jobs
Price stability
The price level in the economy not changing significantly over time
Inflation rate
The percentage rise in the price level of goods and services over time
Balance of payments
The record of a country’s economic transactions with other countries
