Theme 2 Definitions Flashcards
Memorise definitions for essays
Actual Growth
Economic growth measured by changes in real GDP
Animal Spirits
The level of confidence of Business Owners
Balance of payments
A record of all financial dealings over a period of time between
economic agents of one country and another
Consumer Price
Index (CPI)
official measure used to calculate inflation, using a weighted basket of goods
Cost Push inflation
Inflation caused by a decrease in AS
Current Account
A record of the payments for the purchase and sale of goods and
services, as well as income and transfers in and out of a country (X-M)
Demand Pull Inflation
inflation caused by an increase in AD
Direct Tax
Taxes on spending
Disinflation
reduction in the rate of inflation
Disposable income
The money consumers have left to spend, after taxes have been taken away and benefits added
Economic Growth
An increase in the long term productive potential in the economy; an increase in the amount of goods and services which are produced, measured by an increase in real GDP
Expansionary Policy
Fiscal or monetary policy which is aimed at increasing AD
Exports
Goods or services sold to foreigners that bring income into the country
Export-led Growth
Economic growth arising from an increase in exports
Fiscal Policy
The use of Gov spending and taxation to manipulate the level of AD and improve macroeconomic performance
Gross Domestic Product (GDP)
The value of goods and services in an economy over a given period of time
GDP per capita
Total GDP/Population
Gross investment
Investment both to replace old machinery that has depreciated and to create/buy new ones
Gross National Income (GNI)
The value of goods and services produced by a country over a period of time (GDP) plus net overseas interest payments and dividends
Dividend
A dividend is a distribution of profits by a corporation to its shareholders.
Government Spending
Spending by the government for the provision of goods and services
Imports
Goods and services bought from foreign countries that takes income out of the country
indirect tax
a tax levied on goods and services rather than on income or profits, that bring in Government revenue
inflation
general rise in prices of goods and services over a given period of time
Injection
Money entering the circular flow of income through investment, gov spending and exports
Investment
spending by businesses on capital goods, which lead to the creation of real goods
Marginal propensity to consume
The proportion of an increase in income spent on consumption
change in consumption/change in income
Supply-Side Policies
Are a range of measures aimed at influencing the productive potential of an economy by altering its institutional structure and its working, to promote efficiency and boost output (LRAS). These policies aim to increase the quantity and quality of the factors of production and their productive efficiency, focusing on fostering long-term economic growth.
Monetary Policy
the attempts of the central bank regulatory authority to control the level of AD by altering the base interest rates or the amount of money in the economy
Unemployment
refers to the state when able, willing, and actively seeking individuals cannot find work within the prevailing economic conditions. It serves as a key indicator of overall economic health.
Economic Inactivity
Not searching for work or are not physically able to work
Absolute Advantage
that an economy can produce a greater total of goods for the same quantity of inputs.
Absolute Poverty
When people are unable to afford sufficient necessities to maintain
life; those on less than $1.90 a day
Comparative Advantage
occurs when one country can produce a good or service at a lower opportunity cost than another. This means a country can produce a good relatively cheaper than other countries
