Economics Definitions - Unit 2 (Macroeconomics)

Definitions are a key part of the AS economics exam. The following includes definitions for the AQA Economics Unit 1 exam. Although being specifically written for AQA, the terms will still be useful for other exam boards. This list is not a complete guide but does cover some of the majority of terms used throughout the AS course.

HideShow resource information
  • Created by: josh-95
  • Created on: 20-04-16 13:10
Preview of Economics Definitions - Unit 2 (Macroeconomics)

First 296 words of the document:

Economics Definitions ­ Unit 2 (Macroeconomics)
Definitions are a key part of the AS economics exam. The following includes definitions
for the AQA Economics Unit 2 exam. Although being specifically written for AQA, the
terms will still be useful for other exam boards. This list is not a complete guide but
does cover some of the majority of terms used throughout the AS course.
Term Definition
Government objectives These are key objectives that the
government wants to achieve through the
use of policy and regulation.
Economic growth An increase in the output of goods and
services produced over a period of time.
Short-run economic growth When variable factors of production are
added to at least one fixed factor.
Long-run economic growth When all factors of production are variable.
Gross domestic product (GDP) The value of all the goods and services
produced by an economy over a period of
time.
Real GDP Takes into account changes in the prices of
goods and services according to the rate of
inflation.
Nominal GDP Measured at current market prices and
does not take into account inflation.
Full employment A state in which all labour resources are
being utilised.
Price stability When prices remain fairly constant over a
period of time.
Inflation A persistent increase in prices which is
currently measured by the CPI.
Deflation A persistent decrease in prices which is
again measured by the CPI.
Disinflation A reduction in the rate of inflation.
Demand pull inflation When AD is growing at an unsustainable
rate leading to an increased pressure on
scarce resources resulting in inflation
Page | 1

Other pages in this set

Page 2

Preview of page 2

Here's a taster:

Cost push inflation When firms respond to rising costs of
production by increasing prices to protect
their profit margins.
Price index An index number which shows the extent to
which a price has changed compared to
previous years.
Consumer price index (CPI) The official measure of inflation looks at the
change in prices of a market basket of
goods and services.
Retail price index (RPI) Previously used for inflation, now used to
calculate TV licences and some taxes.…read more

Page 3

Preview of page 3

Here's a taster:

Paradox of thrift If everyone starts to save AD will shift to the
left resulting in a recession ­ the one thing
people tried to avoid by saving.
Multiplier effect When a change in one component of
aggregate demand will lead to an even
greater change in national output.
Accelerator effect When a change in aggregate demand leads
to an even greater change in spending on
capital goods.
Aggregate supply The value of goods and services produced
by an economy.…read more

Page 4

Preview of page 4

Here's a taster:

Keynesian fiscal policy Policy which aims to shift AD to the right.
Supply side fiscal policy The use of policy to create incentives for
people to work and therefore increase the
productive potential of an economy.
Income tax A progressive tax levied on an individual's
earnings.
Crowding out A process through which government
spending fails to increase AD because
higher spending causes an equivalent fall in
private sector spending.
Tax A compulsory contribution to state revenue,
there are two types.…read more

Page 5

Preview of page 5

Here's a taster:

Consumer confidence An indicator that measures the degree of
optimism or pessimism that consumers
have within markets.
Business confidence An indicator that measures the degree of
optimism or pessimism that businesses
have within markets.
Unemployment Those who are without a job but are
seeking employment.
Claimant Count Measures the number of people claiming
unemployment related welfare payments.
Labour Force Survey Measures unemployment based upon the
answers of 60,000 households whose
selection is based on a stratified sample.
Frictional unemployment When people are moving between jobs.…read more

Page 6

Preview of page 6

Here's a taster:

Notes
The definitions have been collected from a variety of sources. I have included a few links
below which you may find useful when preparing for your exam.
- www.tutor2u.net/economics
- www.economicsonline.co.uk
- www.investopedia.com/dictionary/
- www.economicshelp.org
- www.as-notes.…read more

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all resources »