Other Flashcards
Net trade definition
The difference in value between a country’s exports of goods and services and its imports
Exports-imports
Net immigration definition
The amount by which the number of immigrants (= people arriving to live in a country) is greater than the number of emigrants (= people leaving).
Interest rate definition
PRICE OF MONEY-
Annual percentage paid to free borrow of money
Characteristics of a recession
- Fall in inflation due to reduction in consumer expenditure
- Rising unemployment due to less demand for workers due to falling real output
- Falling profits/ investment- higher level of business failure
- Increasing budget deficit due to rise in government spending/ fall in tax revenues
Factors that the MPC at Bank of England consider when reducing the base rate
- Confidence can indicate changes turning points in business cycle
- House prices- decide household wealth, which translates to borrowing/spending
- Growth rate and spare capacity- ensure that AD grows in line with productive potential
National income definition
Total spending on goods and services in economy
Circular flow of income definition
Money flows around the economy between consumers/households and firms- DIAGRAM
Purchasing power parity definition
The rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country.
Takes into account costs of living to compare different countries
Reasons for reduction in trade deficit?
- Falling commodity prices e.g. oil - reduces costs of imports
- Lower UK inflation- exports become more competitive
- Improvement in quality of UK exports increases demand for them
- Depreciation of exchange rate-
fall in value in pound makes exports cheaper and imports more expensive
Reasons for change in consumer confidence
- Falling unemployment
- Lower inflation
- Rising income/growth- leads to more job security
Marginal Propensity to consume definition
Change in consumption/ change in income
The proportion of one additional unit of income that is spent
