Key Terms F582 - Chapter 4

Key terms Unit 4

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Aggregate Demand
the total demand for a country's goods and services at a given price level and in a given time period
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Price Level
the average of each of the prices of all the products produced in an economy
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Consumer Expenditure
spending by households on consumer products
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Investment
spending on capital goods
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Government Spending
spending by the central government and local government on goods and services
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Exports
products sold abroad
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Imports
products brought from abroad
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Net exports
the value of exports minus the value of imports
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Transfer payments
money transferred from one person or group to another not in return for any good or service
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Job seekers' allowance
a benefit paid by the government for those unemployed and trying to find a job
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Trade surplus
the value of exports exceeding the value of imports
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Trade deficit
the value of imports exceeding the value of exports
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Consumer confidence
how optimistic consumers are about future economic prospects
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Rate of interst
the charge for borrowing money and the amount paid for lending money
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Average propensity to consume
(APC) the proportion of disposable income spent. It is consumer expenditure divided by disposable income
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Net savers
people who save more than they borrow
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Wealth
a stock of assets, e.g. property, shares and money held in a savings account
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Distribution of income
how income is shared out between households in a country
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Inflation
a sustained rise in the price level
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Saving
real disposable income minus spending
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Average propensity to save
(APS) the proportion of disposable income saved. It is saving divided by disposable income
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Target savers
people who save with a target figure in mind
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Dissave
spending more than disposable income
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Savings ratio
savings as proportion of disposable income
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Capacity utilisation
the extent to which firms are using their capital goods
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Corporation tax
a tax on firms' profits
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Retained profits
profit kept by firms to finance investment
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Unit cost
average cost per unit of output
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Real GDP
the country's output measured in constant prices and so adjusted for inflation
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Gross domestic product
(GDP) the total output of goods and services produced in a country
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Exchange rate
the price of one currency in terms of another currency
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Tariff
a tax on imports
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Government bond
a financial asset issued by the central or local government as a means of borrowing money
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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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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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Privatisation
transfer of assets from the public to the private sector
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Macroeconomic equilibrium
a situation where aggregate demand equals aggregate supply and real GDP is not changing
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Circular flow of income
the movement of spending and income throughout the economy
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Factor services
the services provided by the factors of production
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Leakages
withdrawals of possible spending from the circular flow of income
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Injections
additions of extra spending into the circular flow of income
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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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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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Trend growth
the expected increase in potential output over time
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Other cards in this set

Card 2

Front

Price Level

Back

the average of each of the prices of all the products produced in an economy

Card 3

Front

Consumer Expenditure

Back

Preview of the front of card 3

Card 4

Front

Investment

Back

Preview of the front of card 4

Card 5

Front

Government Spending

Back

Preview of the front of card 5
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