ssts Flashcards
define gdp
the total value of output produced in an economy in a year. the value of all income expenditure and output in an economy.
what is the savings ratio
the proportion of income that consumers save, rather than spend
what is the welath effect
when the value of houses rise, people are entitled to a payment from govt up to the value of the increase. as a result ad increases as consumers feel wealthier. when the value of their assets rise, whhilst there is no change in income, they feel as if they have more money and spend more as a result
What is real national income
The level of income earned in an economy but minus inflation, to account for the higher prices which reduce purchasing power
What is national income per capita
The total income made in an economy divided by the population.
Define economies of scale
When the more a firm produces, the lower its costs become
Pull what is purchasing power
Refers to the amount of goods and services that can be bought with a given amount of currency. The more that can be bought, the higher the purchasing power
What is the tax allowance
The threshold above which income tax is levied on. Essentially how much of ones income they can keep tax free. In the uk it is £12,570
What is a tariff
A tariff is a tax on imports which is levied in order to protect domestic businesses and stimulate economic growth
What are primary income flows
Otherwise known as investment income and is the money that is entering British bank accounts from uk citizens working abroad, as well as the income leaving to abroad from people working in the uk who don’t live there
What is aggregate demand
The quantity that consumers are willing and able to buy at any given price and time
What is productivity
The efficiency of factors of production in the production process. Measured in output per worker or output per given time
What is inelastic supply
Inelastic supply is the inability to increase supply in response to a rise in demand. This may be due to a number of reasons, such as difficulty in switching between production, processes, perishability of goods, meaning the business cannot stop pile, a long time needed to extract, raw materials, there, being a specific window of time in the year, where supply can occur, e.g in farming and the availability of spare capacity
What is quantitative easing?
 Quantitative easing is a process whereby governments buyback bonds early in an attempt to simulate aggregate demand. They do this by creating money electronically which will then be used to buy back the bonds. This will mean that there is more money circulating in the economy and I supply increases, the pound will begin to depreciate unless aggregate demand, stimulated. Also interest rates will be lower because of the increase in money supply.
What is invisible trade?
this is another word for trade in services and includes things such as tourism, insurance, and financial services
