Macro Definitions

Question 1

Aggregate Demand

Answer 1

The total value of goods and services demanded by different groups at a given price level in a nation

Question 2

National Income

Answer 2

A measure of the total economic activity that takes place within a nation

Question 3

Consumption

Answer 3

The total expenditure by households when they purchase goods and services

Question 4

Circular flow of income

Answer 4

The exchanges that take place when goods and services or factors or production are sold

Question 5

GDP

Answer 5

The total value of all goods and services produced in an economy in a given period of time

Question 6

Recession

Answer 6

Negative economic growth occurring over two or more quarters

Question 7

The Money market

Answer 7

A model showing the total supply and demand for money in a nation

Question 8

Monetary policy

Answer 8

The manipulation of interest rates and money supply to influence the level of AD in a country

Question 9

Infrastructure

Answer 9

The capital stock of a country that facilitates economic growth - usually provided by government

Question 10

Equity

Answer 10

Refers to fairness- where all individuals in society have a fair chance at achieving economic success

Question 11

Equality

Answer 11

Minimizing the disparities in income and wealth among a nation’s households

Question 12

(Economic) Efficiency

Answer 12

A level of performance that uses the least amount of resources to achieve highest amount of output

Question 13

Absolute poverty

Answer 13

People earning below internationally defined levels of income i.e. $1.90

Question 14

Relative poverty

Answer 14

Refers to low levels of income that is country-specific - relative the average level of income in that country

Question 15

Keynesian Multiplier Effect

Answer 15

Any change in government spending will have a larger ultimate effect on the nation’s GDP as the resulting change in household income leads to further changes in consumption and investment in the economy.

Question 16

Economic Growth

Answer 16

An increase in real output over time, measured by changes in real GDP

Question 17

Unemployment

Answer 17

The condition of someone of working age who is willing and able to work, actively seeking employment, but unable to find a job

Question 18

Inflation

Answer 18

A sustained increase in the average price level of goods and services in a nation

Question 19

Demand-pull inflation

Answer 19

Inflation caused by an increase in AD in an economy

Question 20

Cost-push inflation

Answer 20

Inflation caused by an increase in the costs of production in an economy

Question 21

Demand-deficient deflation

Answer 21

Result of fall in demand - Bad

Question 22

Supply-side deflation

Answer 22

Result of increase in productivity and lower costs- Good

Question 23

Productivity

Answer 23

Amount of output per unit of input

Question 24

Business confidence

Answer 24

Related to the expectations of businesses about the future of economic conditions and affects the level of investment

Question 25

Inflationary gap

Answer 25

Situation where the economy is at a level of output greater than the full employment level of output/above potential output

Question 26

Investment

Answer 26

Expenditure/spending by firms on capital

Question 27

Privatization

Answer 27

The government sells state-owned enterprises to the private sector

Question 28

Budget deficit

Answer 28

When government spending exceeds government revenue

Question 29

Deflationary gap

Answer 29

Situation where the economy is at a level of output lower than the full employment level output/ below potential output

Question 30

Rate of inflation

Answer 30

The rate at which prices increase over time, causing the value of money to fall