Aqa As Economics Unit 2

Front 1

Unemployment

Back 1

The number of people of a working age that are willing and able to find work yet do not have a paid job

Front 2

Economic Activity

Back 2

Those either looking for work or in work

Front 3

Economically Inactive

Back 3

Those of working age who have chosen not to do paid work or look for paid work

Front 4

Gross Domestic Product (GDP)

Back 4

The value of output produced by domestic based resources per year

Front 5

Economic Growth

Back 5

Rate of increase in national output per year

Front 6

Real Growth

Back 6

Growth of GDP after inflation has been accounted for

Front 7

Inflation

Back 7

Inflation is a continuing and persistent increase in the average price level.

Rate of change in average price level

Front 8

Balance of Payments

Back 8

(X-M)

A record of the transactions between residents of one country and those living abroad over a year

Front 9

Balance of Payments - Current Account

Back 9

The net inflow of money to a country arising from international trade in goods and services, investment, income and transfers

Front 10

Investment Income

Back 10

Earnings from ownership of assets

Front 11

Aggregate Demand

Back 11

The sum of all planned spending on domestic output at a given general price level per period

Front 12

Aggregate Supply

Back 12

The sum of all planned domestic production at a given general price level per period

Front 13

Consumption (C)

Back 13

Spending by domestic households on consumer goods and services

Front 14

Investment (I)

Back 14

Spending by domestic firms on capital goods

Front 15

Circular Flow of Income

Back 15

Model which explains what determines the equilibrium level of national income

Front 16

Injection (J)

Back 16

Spending on domestic output which comes from outside the simple circular income i.e. investment, government spending and exports

Front 17

Withdrawals/Leakages (W)

Back 17

Income which is not spent on domestic output (consumption) i.e. savings, taxation

Front 18

Multiplier Effect

Back 18

The knock on effect of a change in injections or withdrawals on national income

Front 19

Wealth Effect

Back 19

A rise in personal wealth will encourage consumer to spend more and save less

Front 20

Recession

Back 20

Declining real GDP for two successive quarters

Front 21

Output Gap

Back 21

Actual GDP - Sustainable GDP

Front 22

Demand Management

Back 22

When the government attempts to control AD by adjusting tax rates, interest rates and gov. spending in order to avoid booms (high inflation) and busts (high unemployment)

Front 23

Supply Side Policies

Back 23

Government attempts to increase AS

Front 24

Fiscal Policy

Back 24

Manipulation of gov. spending and taxation to achieve macroeconomic goals

Front 25

Monetary Policy

Back 25

Manipulation of interest rates to achieve macroeconomic goals

Front 26

Exchange Rate

Back 26

The price of one currency in terms of another

Front 27

Interest Rates (r)

Back 27

The price of liquidity (money in a spendable form) e.g. bank deposits or cash

Front 28

Disposable Income (Yd)

Back 28

Household income after subtracting direct taxes (income tax and national insurance contributions and adding gov. benefit payments)

Front 29

Productivity Gap

Back 29

The difference between output per worker in two or more countries, each with a different average labour productivity

Front 30

Productivity

Back 30

Output per worker measured over a period of time

Front 31

Demand Pull Inflation

Back 31

Demand pull inflation is the name given to a continuously rising price level cause by excess aggregate demand in the economy

Front 32

Budget Deficit

Back 32

Difference between revenue coming in and expenditure flowing out

Front 33

Output Gap

Back 33

national output is higher or lower than it would have been if the country had growncontinuously at its trend rate of growth.