Economics F582 0.0 / 5 ? EconomicsAggregate Demand and Supply and their interactionASOCR Created by: FathmaCreated on: 18-03-14 19:45 Aggregate demand The total demand for a country's goods and services at a given price level and in a given time period 1 of 27 Transfer payments money transferred from one person or group to another not in return for any good or service 2 of 27 Trade surplus the value of exports exceeding the value of imports 3 of 27 Trade deficit the value of imports exceeding the value of imports 4 of 27 Consumer confidence How optimistic consumers are about future economic prospects 5 of 27 Average propensity to consume (APC) The proportion of disposable income spent. It is the consumer expenditure divided by disposable income 6 of 27 Net savers People who save more than they spend 7 of 27 Wealth stock of assets e.g. property, shares and money held in savings accounts 8 of 27 Distribution of income how income is shared out between households in a country 9 of 27 Inflation A sustained rise in the price level 10 of 27 Capacity utilisation The extent to which firms are using their capital goods 11 of 27 Real GDP The country's output measured in constant prices and adjusted according to inflation 12 of 27 Gross domestic product (GDP) The total output of goods and services produced in a country 13 of 27 Exchange rate The price of one currency in terms of another currency 14 of 27 Government bond A financial asset issued by the central or local government as a means of borrowing money 15 of 27 Aggregate supply The total amount producers in an economy are willing and able to supply at a given time period 16 of 27 Productivity Output, or production, of a good or service per worker per unit of a fact of production in a given time period 17 of 27 Privatisation Transfer of assets from the public to the private sector 18 of 27 Macroeconomic equilibrium A situation where aggregate demand equals aggregate supply and real GDP is not changing 19 of 27 Circular flow on income The movement of spending and income throughout the economy 20 of 27 Factor services The services provided by the factors of production 21 of 27 Multiplier effect The process by which any change in a component go aggregate demand results in a greater final change in real GDP 22 of 27 Leakages Withdrawal of possible spending from the circular flow of income 23 of 27 Injections Additions of extra spending into the circular flow of income 24 of 27 Overheating The growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation 25 of 27 Output gap The difference between an economy's actual and potential real GDP 26 of 27 Trend growth The expected increase in potential output over time 27 of 27
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