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Key Words

Word Definition
Economics The allocation of scarce resources to
provide for unlimited human wants
Macroeconomics The study of the economy as a whole,
including, inflation, growth and
Depression A period when there is a particularly deep
and long fall in output
Recession A period when growth…

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factories and machines is used to make
goods and services
Withdrawals/Leakages In the circular flow of income, spending by
households which does not flow back to
domestic firms. It includes savings, taxes
and imports
Boom A period of time when the economy is
growing strongly and is operating around…

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structural unemployment are regional,
sectoral or technological unemployment
Consumer Price Index (CPI) A measure of the price level used across
the EU and used by the Bank of England
to measure inflation against its target
Costpush Inflation Inflation caused by increases in the costs
of production in the economy…

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Current Account Deficit When imports are greater than exports
Current Account Surplus When exports are greater than imports
Invisibles Trade in services, transfers of income and
other payments or receipts
Visibles Trade in goods
Average Propensity To Consume The proportion of total income spent. It is
calculated by C…

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Aggregate Demand Curve Shows the relationship between the price
level and equilibrium National Income. As
the price level rises, the equilibrium level
of National Income falls
Domestic Economy The economy of a single country
Multiplier Effect An increase in investment or any other
autonomous expenditure leading to an

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Fiscal Policy The decisions made about the spending,
taxes and borrowing of the government
used to control aggregate demand in the
National Debt The accumulated borrowings of
Overheating The economy overheats if aggregate
demand is increased when the economy
is already at its full productive potential.

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managing the country's gold and currency
reserves and issuing government debt
Instrument Of Policy An economic variable, such as the rate of
interest, income tax rates or government
spending on education, which is used to
achieve a target of government policy
Monetary Policy The attempt by government or a…

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Macroeconomics is concerned with the economy as a whole whilst
microeconomics is the study of individual markets within the economy.
National economic performance can be measured in a number of different ways.
Four key macroeconomic variables are the economic growth rate,
unemployment, inflation and the current account balance.…

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Economic growth is the change in potential output of the economy shown by a
shift to the right of the production possibility frontier (PPF). Economic growth is
usually measured by the change in real National Income.
Economic growth is caused by increases in the quantity or quality of land,…

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changes in the economy and cyclical unemployment caused by a lack of
aggregate demand.
The impact of immigration on employment and unemployment is complex
depending on the level of immigration, whether the economy is at full
employment and the skills of migrants.
The costs of unemployment include financial costs…



got the exam later today. Thanks!


This 18 page document has most of the definitions required for AS macro economics and accompanying notes on some of the main concepts. It is wordy but visual learners can adapt the information.

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