Chapter 27 Flashcards

1
Q

Business cycle

A

The four stages an economy goes through over a period of time, as an economy does not grow at a steady rate.

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2
Q

Inflation

A

Increase in the average price level of goods and services over time.

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3
Q

Unemployment

A

This exists when people who are willing and able to work cannot find a job

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4
Q

Gross Domestic Product (GDP)

A

The total value of output of goods and services in a country in one year.

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5
Q

Economic growth

A

A country’s GDP increases, i.e. more goods and services are produced than in the previous year.

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6
Q

Balance of payments

A

This records the difference between a country’s exports and imports.

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7
Q

Real income

A

The value of income or what the income will buy - it falls if prices rise faster than money income

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8
Q

Recession

A

A period of falling GDP.

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9
Q

Exports

A

Goods and services sold from one country to other countries. .

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10
Q

Imports

A

goods and services bought in by one country from other countries.

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11
Q

Exchange rate

A

The price of one currency in terms of another, eg. £1 = $1.50.

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12
Q

Exchange rate appreciation

A

A rise in the value of a currency compared to other currencies.

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13
Q

Exchange rate depreciation

A

The fall in the value of a currency compared with other currencies.

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14
Q

Monetary policy

A

A change in interest rates by the government or central bank, e.g. the European Central Bank.

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15
Q

Supply-side policies

A

Policies to increase the competitiveness of industries in an economy against those from other countries. Policies to make the economy more efficient.

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16
Q

Fiscal policy

A

Any change by the government in tax rates or public sector spending.

17
Q

Direct taxes

A

Paid directly from incomes, e.g. income tax or profit tax.

18
Q

Indirect taxes

A

This is added to the prices of goods and taxpayers pay the tax as they purchase the goods. e.g. VAT.

19
Q

Disposable income

A

The level of income left after a taxpayer has paid income tax and any other taxes on income plus any money benefits from the government.

20
Q

Import tariff

A

Tax on an imported product.

21
Q

Import quota

A

A physical limit to the quantity of a product that can be imported.