Unit 4 Definitions Flashcards
Exchange rates
The price of one currency expressed in terms of another e.g pound/ US dollar the value of one sure envy expressed on terms of another
Interest rates
The cost of borrowing money and the return made on savings. The Bank of England sets a base rate which Influences the levels of UK interest rates
Inflation
A rise in the average level of prices in an economy. a fall in the purchasing power of money measures in the uk by CPI and RPI
Relation
Situation where prices are falling and the purchasing value if money is increasing it is assisted with low to no growth
CPI and RPI
Consumer price index and retail price index both measure inflation and both represent a basket of good bought typically in uk family’s the price is reviewe each month to give retail annual rate of inflation
Cost plus inflation
Occurs when rising production costs force firms to increase prices to protect their profit margins
Demand pull inflation
Process by which prices rise because there is excess demand in the economy
Hyperinflation
A situation where the value of money decreases so fast that it loses some or all of its function eg in Zimbabwe inflation rates over 100%
GDP
The total value of all goods and services produces by an economy over a given period. Main measure for economic growth
Economic growth
An increase in the value of economic activity over a specific period measure in terms of the change in GDP. When the economy is increasing it’s capacity and output is rising eg china
Business cycle
The observed patterns of increase and decreases in economic growth measures by the percentage changes in GDP over the long term it is know was increasing boom and decreasing a recession
Recession
A period of two consecutive quarter six months where economic growth is negative
Consumer durables
Goods bought by individuals and households to use , they last for sole time such as cars and Tvs
