ECON2 Definitions

In a current account, it is the difference in value between imports and exports

The number of people who are willing and able to work, who are actively seeking employment

An increase in the total value of all goods/services produced in an economy, over a given period of time

A sustained increase in general price levels

The natural fluctuation of the level of GDP, moving an economy between economic booms and recessions in a continuous cycle

The total number of people within an economy that have the willingness and ability to consume a good/service, at any given price, over a given period of time

The total willingness and ability of producers to supply goods/services within an economy, at any given price, over a given period of time

The productive capacity within an economy

Spending by central and local government on goods/services

The number of people who are purchasing good/services

When firms invest their profits into purchasing capital equipment

The value of all goods/services exported minus the value of all goods/services imorted

Model that shows how money flows between households and firms.

An effect which causes repeated increases in aggregate demand, orginally caused by an increase in consumption

The proportion of disposable income spent. It is consumer expenditure / disposable income

The proportion of disposable income saved. It is saving / disposable income 

When actual GDP is greater than trend/potential GDP

When actual GDP is less than trend/potential GDP

Unemployed due to the stage of the economic cycle that the economy is at

Unemployed due to being between jobs

Unemployed due to not having the necessary skills to carry out the job

Unemployment due to the time of year that it is

Inflation caused by an increase in aggregate demand

Inflation caused by a decrease in short run aggregate supply

An effect which causes repeated increases in aggregate demand, orginally caused by an increase in investment

The use of tax levels and government spending in order to control aggregate demand

The use of interest rates and money supply in order to control aggregate demand

The way that the Bank of England increases the money supply, by buying large sums of government debt, in the form of government bonds

Policies that the government use, over a long period of time, in order to increase long run aggregate supply and therefore economic growth

The price of one currency in terms of another