key words and phrases

Question 1

Goods market

Answer 1

goods + services

Question 2

GDP

Answer 2

gross domestic product = the value of goods and services produced in the economy over a period of time

Question 3

National income, national expenditure and GDP what is similar about these things

Answer 3

they are all the same

Question 4

money that leave the circular flow is called

Answer 4

a leakage

Question 5

what is Wealth

Answer 5

is a stock concept usually held in assets

Question 6

what is income

Answer 6

flow concept like mount generated from wealth

Question 7

A recession

Answer 7

two quarters of negative economic growth

Question 8

what does real mean

Answer 8

takes into account inflation

Question 9

PPP

Answer 9

purchasing power parities

Question 10

what is potential growth

Answer 10

Long term growth is productivity potential in the 4 factors of production and aggregate demand

Question 11

what is actual growth

Answer 11

Short term growth its % increase in real gdp aggregate supply

Question 12

what is gni definition

Answer 12

includes the value of all goods and services produced by nationals

Question 13

what is an white elephant

Answer 13

a infrastructure that isn’t used.

Question 14

what are the economic agents

Answer 14

government, households workers firms and environment

Question 15

what are savings

Answer 15

money not spent (income not spent)

Question 16

what are investments

Answer 16

increases the value of money into capital - human skill + physical

Question 17

Aggreate demand

Answer 17

Total planned level of expenditure on goods and a services in an economy at a given price level

Question 18

short term aggregate supply

Answer 18

all factors of production are fixed with the exception of labour which can be hired to cover increases in aggregate demand

Question 19

long term aggregate supply

Answer 19

all factors of production are variable and can be increased over time it represents maximum possible output an economy can produce given 4 FOP resources

Question 20

marginal utility

Answer 20

marginal utility is the change in total utility or satisfaction derived from consuming an extra unit of a good or service

Question 21

utility

Answer 21

satisfaction attached to consuming goods or service

Question 22

Marginal product

Answer 22

is the difference between total output when an extra unit of the variable factor e.g. labour is added

Question 23

formula for marginal product

Answer 23

It is calculated as:
Change in total output
Change in variable input

Question 24

Production is measured in physical rather than in monetary terms so we can also use the term

Answer 24

Marginal Physical Product (MPP)

Question 25

Marginal revenue

Answer 25

is the addition to revenue of selling an additional unit of output:

Question 26

Marginal revenue product (MRP)

Answer 26

) is the change in total revenue from the employment of an extra unit of labour

Question 27

negative output gap

Answer 27

The output gap is simply the difference between what the economy produces and what it could – potentially – produce. There is a negative output gap whenever potential GDP exceeds actual GDP