Chapter 26 Flashcards
Business cycle
The four stages an economy goes through over a period of time, as an economy does
not grow at a steady rate.
Inflation
Increase in the average price level of goods and services over time.
Unemployment
This exists when people who are willing and able to work cannot find a job.
Gross Domestic
Product (GDP)
The total value of output of goods and services in a country in one year.
Economic growth
A country’s GDP increases, i.e. more goods and services are produced than in the
previous year.
Balance of payments
This records the difference between a country’s exports and imports.
Real income
The value of income or what the income will buy - it falls if prices rise faster than
money income.
Recession
A period of falling GDP.
Exports
Goods and services sold from one country to other countries.
Imports
Goods and services bought in by one country from other countries.
Exchange rate
The price of one currency in terms of another, e.g. £1 = $1.50.
Exchange rate
A rise in the value of a currency compared to other currencies.
appreciation
Exchange rate depreciation
The fall in the value of a currency compared with other currencies.
Monetary policy
A change in interest rates by the government or central bank, e.g. the European
Central Bank.
Supply-side policies
Policies to increase the competitiveness of industries in an economy against those from
other countries. Policies to make the economy more efficient.