Economics Definitions

Front 1

Price Level

Back 1

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

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Consumer Expenditure

Back 2

spending by households on consumer products

Front 3

Investment

Back 3

spending on capital goods

Front 4

Government Spending

Back 4

spending by the government on goods and services

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Exports

Back 5

products sold abroad

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Imports

Back 6

products bought from abroad

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Net exports

Back 7

the value of exports minus the value of imports

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Aggregate demand

Back 8

the total demand for a country's goods and services at a given price level over a given time period

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Transfer Payments

Back 9

money transferred from one person or group to another not in return for any good or service

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Trade Surplus

Back 10

the value of exports exceeding the value of imports

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Trade Deficit

Back 11

the value of imports exceeding the value of exports

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Rate of interest

Back 12

the charge for borrowing money and the amount paid for lending money

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Net Savers

Back 13

people who save more than they borrow

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Distribution of income

Back 14

how income is shared out between households in a country

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Saving

Back 15

real disposoble income minus spending

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Target savers

Back 16

people who save with a target figure in mind

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Dissave

Back 17

spending more than disposable income

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Capacity Utilisation

Back 18

the extent to which firms are using their capital goods

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Corporation tax

Back 19

a tax on firms' profits

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retained profits

Back 20

profit kept by firms to finance investment

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unit cost

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average cost per unit of output

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real GDP

Back 22

the country's output measured in constant prices and so adjusted for inflation

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GDP (gross domestic product)

Back 23

the total output of goods and services produced in a country

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exchange rate

Back 24

the price of one currency in terms of another currency

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Tarrif

Back 25

a tax on imports

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Government bond

Back 26

a financial asset issued by the government as a means of borrowing money

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Aggregate Supply

Back 27

the total amount that producers in an economy are willing and able to supply at a given price level over a time period

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Productivity

Back 28

output, of a good or service per worker per unit of a factor of production in a given time period

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Privatisation

Back 29

transfer of assets from the public to the private sector

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Macroeconomics equilibrium

Back 30

a situation where aggregate demand equals aggregate supply and real GDP is not changing

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Circular flow of income

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the movement of spending and income throughout the economy

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Leakages

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withdrawls of possible spending from the circular flow of income

Front 33

Injections

Back 33

additions of extra spending into the circular flow of income

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Multiplier effect

Back 34

the process by which any change in a component of aggregate demand results in a final greater change in real GDP

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Output gap

Back 35

the difference between an economy's actual and potential real GDP

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Trend growth

Back 36

the expected increase in potential output over time

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Economic Growth

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in the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is, in the maximum output that the ecomony can produce

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Unemployment

Back 38

a situation where people are out of work but are willing and able to work

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Labour force

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the people who are employed and unemployed, that is, those who are economically active

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Economically inactive

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people of working age who are neither employed nor unemployed

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Deflation

Back 41

a sustained fall in the general price level

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Balance of payments

Back 42

a record of money flows coming in and going out of a country

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Elastic

Back 43

responsive to a change in market conditions

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Inflation rate

Back 44

the percentage increase in the price level over a period of time

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Sustainable economic growth

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economic growth that can continue over time and does not endanger future generations' ability to expand productive capacity

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Trend growth

Back 46

the expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation

Front 47

full employment

Back 47

a situation where those wanting and able to work can find employment at the going wage rate

Front 48

current account deficit

Back 48

when more money is leaving the country than entering it

Front 49

Hyperinflation

Back 49

an inflation rate above 50%