Definitions Test 2 (LRAS/SRAD ect) Flashcards
Actual Economic Growth
An increase in real GDP
Aggregate Supply
The total value of output all producer are willing and able to supply at a given time period and price level.
Aggregate Demand
Total spending on domestic output at a given price level.
Balance of Payments
A record of a countries trade and investment with other countries.
Deflation
A sustained fall in the average price levels.
Economic Growth
The growth in the value of the output of an economy.
Fiscal Drag
The reduction in disposable income that occurs if tax bands are not adjusted with inflation.
Geographical Mobility
The movement of an economic resource from area to another.
Hyperinflation
A very high rate of inflation which causes serious economic problems and political instability.
Inflation Target
The CPI inflation target is 2%, when it rises/falls by 1%, the Governor must report to Government.
Marginal Propensity to Consume
The proportion of additional income which is spent rather than saved.
Multiplier
An increase in an injection into the circular flow of income causing a greater increase in aggregate demand.
Rate of unemployment
The number of people who are willing and able to work, but are not in work, as a percentage of the labour force.
Shoe Leather Costs
Costs involved in moving money around during a period of inflation to try and maintain its real value.
Structural Unemployment
A mismatch in the demand for skills as a result in the changing pattern of industry.
