Chapter 27 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, eg. £1 = $1.50.
Exchange rate appreciation
A rise in the value of a currency compared to other currencies.
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.
Fiscal policy
Any change by the government in tax rates or public sector spending.
Direct taxes
Paid directly from incomes, e.g. income tax or profit tax.
Indirect taxes
This is added to the prices of goods and taxpayers pay the tax as they purchase the goods. e.g. VAT.
Disposable income
The level of income left after a taxpayer has paid income tax and any other taxes on income plus any money benefits from the government.
Import tariff
Tax on an imported product.
Import quota
A physical limit to the quantity of a product that can be imported.
