Definitions Flashcards
Inflation
A rise in the general price level over a period of time.
Disinflation
A decrease in the rate of inflation; the price level is still rising but at a declining rate.
Deflation
A decrease in the general price level.
Consumer Price Index (CPI)
A measure of inflation.
Rate of inflation
((current CPI - last year’s CPI) / last year’s CPI) x 100
Nominal GDP
Goods and services produced in NZ measured at current year prices (includes the effects of inflation).
Real GDP
Goods and services produced in NZ measured at constant year prices (doesn’t include the effects of inflation).
Nominal Wage
The money wage actually paid to workers measured in current dollars.
Direct Tax (Income tax)
A tax which is levied on the income or profits of a person.
Indirect Tax
A tax levied on goods and services as opposed to income and profits.
Transfer Payments
Payment made/income received such as a benefit or subsidy.
Interest Rates
The proportion of a loan that is charges as interest to a borrower. (The proportion of savings you get back).
Business Confidence
A measure of optimism that a business manager feels about the prospects of their companies.
Exchange Rates
The value of one currency for the purpose of conversion to another.
Aggregate Demand (AD)
Total demand of all goods and services purchased by the economy.
