key words and phrases Flashcards
Goods market
goods + services
GDP
gross domestic product = the value of goods and services produced in the economy over a period of time
National income, national expenditure and GDP what is similar about these things
they are all the same
money that leave the circular flow is called
a leakage
what is Wealth
is a stock concept usually held in assets
what is income
flow concept like mount generated from wealth
A recession
two quarters of negative economic growth
what does real mean
takes into account inflation
PPP
purchasing power parities
what is potential growth
Long term growth is productivity potential in the 4 factors of production and aggregate demand
what is actual growth
Short term growth its % increase in real gdp aggregate supply
what is gni definition
includes the value of all goods and services produced by nationals
what is an white elephant
a infrastructure that isn’t used.
what are the economic agents
government, households workers firms and environment
what are savings
money not spent (income not spent)
what are investments
increases the value of money into capital - human skill + physical
Aggreate demand
Total planned level of expenditure on goods and a services in an economy at a given price level
short term aggregate supply
all factors of production are fixed with the exception of labour which can be hired to cover increases in aggregate demand
long term aggregate supply
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
marginal utility
marginal utility is the change in total utility or satisfaction derived from consuming an extra unit of a good or service
utility
satisfaction attached to consuming goods or service
Marginal product
is the difference between total output when an extra unit of the variable factor e.g. labour is added
formula for marginal product
It is calculated as:
Change in total output
Change in variable input
Production is measured in physical rather than in monetary terms so we can also use the term
Marginal Physical Product (MPP)
Marginal revenue
is the addition to revenue of selling an additional unit of output:
Marginal revenue product (MRP)
) is the change in total revenue from the employment of an extra unit of labour
negative output gap
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
