Economics Terminology

Question 1

What is meant by balance of trade?

Answer 1

the difference in value between a country’s imports and exports.

Question 2

What is Interest?

Answer 2

Interest is the charge for the privilege of borrowing money

Question 3

What is Rent?

Answer 3

pay recieved by someone for the use of land

Question 4

What are Wages?

Answer 4

payment earned for labour or services

Question 5

What are Commodity Prices?

Answer 5

Prices associated with the purchase of a commodity.

Question 6

What is meant by Purchasing Power Parity?

Answer 6

Purchasing power parity is a way of measuring economic variables in different countries so that irrelevant exchange rate variations do not distort comparisons.

Question 7

What is Income?

Answer 7

The flow of money coming to you

Question 8

What is Wealth?

Answer 8

Stock of assets you have

Question 9

What is Income Tax?

Answer 9

tax imposed on individuals or entities that varies with respective income or profits.

Question 10

What are Death Duties?

Answer 10

(in the UK) a tax levied on property after the owner’s death
was replaced in the 90s by Inheritance Tax

Question 11

What is Surtax?

Answer 11

an additional tax on something already taxed, especially a higher rate of tax on incomes above a certain level.

Question 12

What is Aggregate Supply?

Answer 12

Aggregate supply shows the quantity of real GDP which is supplied at difference price levels in the economy.

Question 13

What does the AD/AS Curve look like?

Answer 13

https://macroeconomicanalysis.com/macroeconomics-wikipedia/ad-as-model/

Question 14

What are the main 4 Macroeconomic Objectives?

Answer 14

Economic Growth
Low + Stable Inflation
Low Unemployment
Balance of Payments Equilibrium on Current Account

Question 15

What are all 7 Macroeconomic Objectives?

Answer 15

• Economic Growth
• Low Unemployment
• Low + Stable Inflation
• Balance of Payments Equilibrium on Current Account
• Balanced government budget
• Protection of the Environment
• Greater Income Equality

Question 16

What is Capital?

Answer 16

Wealth, in the form of money or other assets, owned by a person or organization or available
Capital goods are used to produce consumer goods (eg machinery)

Human Capital: Investment in Education + Training of Workers
Physical Capital: Investment in Factories, Materials, etc.

Question 17

What is meant by the Propensity to Consume?

Answer 17

Natural tendency to consume

Question 18

What are Sinking Funds?

Answer 18

A sinking fund is a fund containing money set aside or saved to pay off a debt or bond.

Question 19

What is Consumption?

Answer 19

• The amount Households Spend on Goods + Services to Satisfy their Current Wants
• Consumption can be for Both Durable + Non-Durable Goods

Question 20

What is Investment?

Answer 20

The Addition to the Capital Stock of the Economy

Factories, Machines, Offices + Stocks of Materials used to Produce Other Goods + Services

When firms spend money on capital goods to increase their productive capacity

(think of it like consumption, but for firms)

Question 21

What is Overproduction?

Answer 21

production of more of a product, commodity, or substance than is wanted or needed.

Question 22

What is Fiscal Policy?

Answer 22

Fiscal policy involves the use of Government Spending and Taxation to influence the pattern of the economy