Chapter 4

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What is the average consumer expenditure in the UK ? [in percent]
60- 65 %
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Define economic growth
increase in aggregate demand per year
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Define trade deficit
import more than we export
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Define trade surplus
import less than we export
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What does GDP stand for?
Gross Domestic Product
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How is economic growth measured?
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What is consumer confidence?
how optimistic consumers are about future economic prospects
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Define rate of interest?
the charge for borrowing money and the amount paid for lending money.
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What is the average propensity to consume [APC] ?
the proportion of disposable income spent. It is consumer expenditure divided by disposable income.
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Define net savers
people who save more than they borrow
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Define wealth
a stock of assets e.g property , shares and money held in a savings account
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What is the distribution of income?
how income is shared out between households in a country
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Define inflation
a sustained rise in the price level
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Define saving
real disposable income minus spending
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What is the average propensity to save [APS]
the proportion of disposable income saved. It is saving divided by disposable income
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Define target savers
people who save with a target figure in mind
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Define dissave
spending more than disposable income
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Define savings ratio
savings as a proportion of disposable income
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Define capacity utilisation
the extent to which firms are using their capital goods
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Define corporation tax
a tax on firms profits
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Define retained profits
profit kept by firms to finance investment
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Define unit cost
average cost per unit of output
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Define real GDP
the country's output measured in constant prices and so adjusted for inflation.
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Define Gross Domestic Product [GDP]
the total output of goods and services produced in a country
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Define exchange rate
the price of one currency in terms of another currency
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Define tariff
a tax on imports
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Define government bond
a financial asset issued by the central or local government as a means of borrowing money
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Define aggregate supply
the total amount that producers in an economy are willing and able to supply at a given price level in a given time period
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Define productivity
output, or production of a good or service per worker per unit of a factor of production in a given time period
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Define privatisation
transfer of assets from the public to the private sector
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What is the macroeconomic equilibrium
a situation where aggregate demand equals aggregate supply and real GDP is not changing
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Define circular flow of income
the movement of spending and income throughout the economy
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Define factor services
the services provided by the factors of production
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Define leakages
withdrawals of possible spending from the circular flow of income
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Define injections
additions of extra spending into the circular flow of income
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Define the multiplier effect
the process by which any change in a component of aggregate demand results in a greater final change in real GDP
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Define overheating
the growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation
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Output gap
the difference between an economy's actual and potential real GDP
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Define trend growth
the expected increase in potential output over time
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Other cards in this set

Card 2


Define economic growth


increase in aggregate demand per year

Card 3


Define trade deficit


Preview of the front of card 3

Card 4


Define trade surplus


Preview of the front of card 4

Card 5


What does GDP stand for?


Preview of the front of card 5
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This is a set of 39 flash cards covering the basics of AD and AS analysis. It can be used to test colleagues or assess your own learning in this area.

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