Definitions Flashcards
Deflation
Persistent fall in the general price levels of goods and services shown by a negative rate of inflation
Disinflation
A fall in the rate of inflation
Inflation
A sustained increase in the general price level for goods and services
Balance of Payments
A record of all financial transactions between an economy and the rest of the world
Balance of Trade
The difference between the value of a countries exports and imports of goods and services
Current Account
Measures the difference between money and credit going in and out of an economy
Current account deficit
When net external trade and income is negative leading to a net outflow of demand from the circular flow.
Current account surplus
When net external trade and income is positive, a net injection into the circular flow.
Circular Flow of Income
An economic model that shows flows of goods and services and factors of production between firms and households
Aggregate demand
Total amount of goods and services demanded in the economy at a given time and price level.
Demand
The quantity of a good or service purchased at a given price over a given time period
Supply
Quantity of a good or service that firms are willing to sell at a given price over a given time period
