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1. Define Consumption
- Consumption is total consumer expenditure on durables, non-durables and services
- Expenditure spent by households on goods and services
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2. Define Absolute Advantage
- An economy has an absolute advantage in good X if it can produce more of X than any other country using the same resources
- An economy has an absolute advantage in good X if it can produce less of X than any other country using the same resources
- An economy has an absolute advantage in good X if it can produce more of X and Y than any other country using the same resources
3. Define Contractionary Fiscal Policy
- A contractionary fiscal policy means so AD falls. Multiplier effects make AD fall further. AD shifts left so inflation falls and real GDP falls
- Contraction in the economy
- A fall in either C I X-M component of aggregate demand
4. Define Comparative Advantage
- Can produce a particular good with lesser opportunity cost than that of the production of the same good in another country
- An economy has a comparative advantage in good X if it can produce X at a lower opportunity cost than any other country
- When one country can produce a good with less resources than the other
5. Define Actual GDP Growth
- Actual GDP growth is the growth in real GDP that currently occurs
- Adjusted increase in real output, accounted with inflation
- Not adjusted - growth in production as a result of inflation and increase in output
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