Macro definitions year 1

Question 1

Macroeconomic equilibrium

Answer 1

situation where aggregate demand = aggregate supply and gdp is constant. also where injections = leakages in circular flow, leaving gdp unchanged

Question 2

injections

Answer 2

any money that adds to consumer spending in the circular flow in the form of investment, government spending or exports

Question 3

leakages

Answer 3

any money that is withdrawn from the circular flow in the form of saving, taxes or import spending

Question 4

investment

Answer 4

spending by firms on capital in the form of plant, equipment or machinery

Question 5

Government spending

Answer 5

any injection of funds into the circular flow by the public sector

Question 6

net exports

Answer 6

the difference between the value of exports and imports (x-m)

Question 7

GDP

Answer 7

the total value of output produced by an economy in one year

Question 8

gdp per capita

Answer 8

total value of output produced by an economy in one year divided by the population

Question 9

exports

Answer 9

any goods or services sold to other nations that results in an inflow or income into the circular flow

Question 10

imports

Answer 10

any purchase of foreign goods and services that leads to an outflow of money from the domestic economy

Question 11

current account surplus

Answer 11

when there is a net inflow of earnings resulting from international trade (x>m)

Question 12

current account deficit

Answer 12

when there is a net outflow of money resulting from international trade (m>x)

Question 13

economic growth

Answer 13

an increase in the value of gdp in one year

Question 14

economic growth rate

Answer 14

the % increase in the value of gdp over time

Question 15

recession

Answer 15

when there are two consecutive quarters of falling gdp

Question 16

budget surplus

Answer 16

when the government collect more tax revenue than it spends, enabling it to repay part of the national debt

Question 17

budget defecit

Answer 17

when the government is spending more than it collects in tax revenue thereby adding to the national debt

Question 18

rate of interest

Answer 18

the cost of borrowing or the reward for saving