Chapter 12 How Macroeconomy Works

Front 1

economic models

Back 1

these are used to show the essential characteristics of complicated economic conditions in order to analyse them and predict the result of changes of variables

Front 2

recession

Back 2

when an economy is growing at less than its long-term trend rate growth

Front 3

balance of payments

Back 3

exports minus imports - a deficit means more is imported than exports

Front 4

flow

Back 4

measured over a specified period of time

Front 5

stock

Back 5

a quantity measured at a particular point in time

Front 6

injections

Back 6

money that originates outside the circular flow and so will increase national income/output/expenditure

Front 7

withdrawals

Back 7

any money not passed on in the circular flow and has the effect of reducing national income/output/expenditure

Front 8

investment

Back 8

spending by firms on buildings, machinery and improving the skills of the labour force

Front 9

savings

Back 9

a withdrawal from the circular flow

Front 10

income induced

Back 10

will increase as income increases and decrease as income decreases

Front 11

multiplier effect

Back 11

where an increase or decrease in spending leads to a larger than proporionate change in the national income