Unit 2 Definitions Flashcards
Aggregate Demand
Total spending on good and services in an economy,
C+I+G+(X-M)
Aggregate supply
The total amount of output in the economy
Balance of Payments
Record of a country’s transactions with the rest of the world
Bottlenecks
A constraint in the supply side which causes the costs of aggregate supply to rise as the economy grows
Business Cycle
The tendency of economic activity to rise above and below the trend of economic growth
Budget Surplus
The amount by tax revenue exceeds government spending
Budget Deficit
The amount by government spending exceeds tax revenue
Claimant count
A measure of those claiming unemployment benefits ( but not people who are not eligible )
Circular Flow of Income
A simple model of the economy which shows the movement of goods and services between households and firms as well as payments in money terms
CPI
Consumer Price Index - the measure of the average levels of prices. Excludes housing costs - higher CPI
= Inflation
Consumption
Total Household Spending
Current account of the balance of payments
A record of a country’s trade of exports, imports, investment income and current transfers with the rest of the world
Economic Growth
A measure of the increase in either real or potential GDP
Equilibrium National Income / Equilibrium Level of Output
The level of income or output at which aggregate demand equals aggregate supply
