Chapter 4

What is the average consumer expenditure in the UK ? [in percent]
60- 65 %
1 of 39
Define economic growth
increase in aggregate demand per year
2 of 39
Define trade deficit
import more than we export
3 of 39
Define trade surplus
import less than we export
4 of 39
What does GDP stand for?
Gross Domestic Product
5 of 39
How is economic growth measured?
6 of 39
What is consumer confidence?
how optimistic consumers are about future economic prospects
7 of 39
Define rate of interest?
the charge for borrowing money and the amount paid for lending money.
8 of 39
What is the average propensity to consume [APC] ?
the proportion of disposable income spent. It is consumer expenditure divided by disposable income.
9 of 39
Define net savers
people who save more than they borrow
10 of 39
Define wealth
a stock of assets e.g property , shares and money held in a savings account
11 of 39
What is the distribution of income?
how income is shared out between households in a country
12 of 39
Define inflation
a sustained rise in the price level
13 of 39
Define saving
real disposable income minus spending
14 of 39
What is the average propensity to save [APS]
the proportion of disposable income saved. It is saving divided by disposable income
15 of 39
Define target savers
people who save with a target figure in mind
16 of 39
Define dissave
spending more than disposable income
17 of 39
Define savings ratio
savings as a proportion of disposable income
18 of 39
Define capacity utilisation
the extent to which firms are using their capital goods
19 of 39
Define corporation tax
a tax on firms profits
20 of 39
Define retained profits
profit kept by firms to finance investment
21 of 39
Define unit cost
average cost per unit of output
22 of 39
Define real GDP
the country's output measured in constant prices and so adjusted for inflation.
23 of 39
Define Gross Domestic Product [GDP]
the total output of goods and services produced in a country
24 of 39
Define exchange rate
the price of one currency in terms of another currency
25 of 39
Define tariff
a tax on imports
26 of 39
Define government bond
a financial asset issued by the central or local government as a means of borrowing money
27 of 39
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
28 of 39
Define productivity
output, or production of a good or service per worker per unit of a factor of production in a given time period
29 of 39
Define privatisation
transfer of assets from the public to the private sector
30 of 39
What is the macroeconomic equilibrium
a situation where aggregate demand equals aggregate supply and real GDP is not changing
31 of 39
Define circular flow of income
the movement of spending and income throughout the economy
32 of 39
Define factor services
the services provided by the factors of production
33 of 39
Define leakages
withdrawals of possible spending from the circular flow of income
34 of 39
Define injections
additions of extra spending into the circular flow of income
35 of 39
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
36 of 39
Define overheating
the growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation
37 of 39
Output gap
the difference between an economy's actual and potential real GDP
38 of 39
Define trend growth
the expected increase in potential output over time
39 of 39

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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