Macro

Question 1

What is the formula used to calculate Aggregate Demand (AD)?

Answer 1

AD = C + I + G + (X - M)

Question 2

Aggregate Demand (AD)

Answer 2

The total amount of planned spending on goods & services at any price level in an economy

Question 3

Budget deficit

Answer 3

When government spending exceeds tax revenue

Question 4

Economic growth

Answer 4

The increase in real GDP

Question 5

Investment

Answer 5

Spending on capital goods

Question 6

Multiplier

Answer 6

The number of times a rise in national incomes exceeds the rise in injections that cause it; it measures the subsequent effects when an injection or withdrawal changes

Question 7

What is the formula used to calculate the multiplier?

Answer 7

Multiplier = 1 / Sum of the propensity to save + tax + import

Question 8

Productivity

Answer 8

Output per unit of labour, measured either in volume or value

Question 9

Circular flow of income

Answer 9

The flow of goods & services between households & firms, & their corresponding payments in money terms

Question 10

Consumption

Answer 10

Total planned spending by households on goods & services produced within the economy, over a period of time

Question 11

Animal spirits

Answer 11

Consumer confidence

Question 12

What are the 2 types of goods that are consumed by households?

Answer 12

1. Durable goods (goods that continue to provide a stream of services over a period of time)
2. Non-durable goods (goods & services which are used up immediately, or over a short time)

Question 13

Saving

Answer 13

The portion of a household’s disposable income which is not spent over a period of time