Measures the increase in personal consumption following an increase in income.
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The Multiplier Effect
An increase in injections which lead to an even greater increase in income.
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Calculating the Multiplier
1/1- MPC
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Boom
A high or sustained period of growth.
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Slump
When demand reduces and growth slows to near nothing.
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Recession
When economic growth is negative for 6 months or more and output reduces.
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Recovery
When the economy goes from a slump to a boom period.
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Actual Growth
This can be defined as an increase in real GDP and potential growth as an increase in capacity in an economy.
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The three ways of measuring GDP
The Output Method (how much output is produced); The Income Method (the total amount of income brought in from production); The Expenditure Method (the total amount spent on final goods and services in an economy).
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National Income Influences
Natural Resources, Size and Quality of the Workforce; Stock of Capital; Technology; Entrepreneurship; Government Direction.
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Economic Cycle
The fluctuation of annual percentage changes in Real GDP and economic activity.
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Benefits of Economic Growth
Productivity increases; Higher competition= lower prices; More jobs; Bigger tax revenue; Better education and health; higher standard of living.
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Negatives of Economic Growth
Pollution, More Traffic, Deforestation, Over-populated, Inflation, Income inequality, opportunity cost.
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Causes of the Business Cycle
Over production, Under Consumption and Wealth Inequality; Consumer Confidence.
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Other cards in this set
Card 2
Front
Saving, Taxation and Imports
Back
Withdrawals
Card 3
Front
Measures the increase in personal consumption following an increase in income.
Back
Card 4
Front
An increase in injections which lead to an even greater increase in income.
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