topic 2 key terms Flashcards
Interest rate
Cost of borrowing money or the return on savings/investment
Transfer payments
Payments made by the government to individuals or groups without expecting any goods or services in return for example welfare payments
Productive capacity
Maximum level of output that an economy can produce using its available resources and technology
Capital spending
Expenditure made by businesses or governments on acquiring or improving physical assets such as machinery
Current spending
Expenditure made by individuals or businesses or governments on goods and services for immediate consumption including wages utilities and Day to day operations
net trade
Difference between a country’s exports and imports of goods and services
External shocks
Unexpected events from outside of the economic system that have a significant impact on it
Foreign direct investment
Investment in capital assets in a foreign country by business with headquarters in another country
Human capital
Skills and knowledge and experience Possessed by the population which individuals contribute to the economy through work
Hysterics
Situation where the effects of a temporary shock that carry on after the initial cause has been removed
Infrastructure
Result of past investment common buildings, roads, bridges (Fixed capital), Needed for the economy to operate efficiently
Net inward migration
The difference between the number of people imigrating into a country and the number of people emigrating from the country
Positive output gap*
The level of actual real output in the economy is greater than the trend output level
Negative output gap*
Level of actual rule output in the economy is lower than the Trend output level
Productivity
Measure of output produced per unit of input
Research and development
Activities by firms to innovate and create new ideas or improve
Stagflation
Situation where there is both high inflation and high unemployment
Sustainable growth
Steady and balanced increase in economic activity over a long period of time
short run growth
growth of real output resulting from using scarce resources including Labour thereby taking up the slack in the economy
long run growth
An increase in the economy’s potential level of rare output and outward movement of the economy’s ppf
Productive capacity
Maximum level of output that an economy is capable of producing with resources available
Economic cycle
Fluctuations of Economic activity in an economy over time
boom
A period of rapid economic growth and expansion of real output rising faster than the trend rate of growth
