definitions Flashcards
(48 cards)
the multiplier
the process by which any change in a component of aggregate demand results in a greater final change in real GDP
MPS (marginal propensity to save)
the proportion of additional income that is saved by households
MPC (marginal propensity to consume)
the proportion of disposable income that households devote to consumer spending (expenditure)
APC (Average propensity to consume)
the proportion of disposable income spent in a economy. CONSUMER EXPENDITURE / DISPOSABLE INCOME
APS ( average propensity to save )
the proportion of disposable income saved in an economy. SAVINGS / DISPOSABLE INCOME
accelerator effect
a rise in national income can lead to a proportionally greater final rise of investment
aggregate demand
The total demand for a countries, goods and services at a given price level, and in a given time period
aggregate supply
The total amount that produces in an economy are willing and able to supply at a given price level in a given time period
balance of payments
 A record of the money flows into an out of a country in a year
claimant count
A monthly count of people claiming unemployment benefits. JSA in the UK
Consumer price index
A measure of the changes in the price of a representative basket of consumer goods and services differs from RPI methodology and coverage
Current account
Trade in goods, trade in services, income flows, and transfers on the balance of payments
deflation
A situation in which the average level of prices falling (negative inflation)
Circular flow of income
A model of the movements of spending and income throughout the economy which shows the impact of injections and withdrawals on real GDP
disposable income
Total personal income minus total personal taxes
Economic growth
In the short run, an increase in real GDP. In the long run and increase in productive capacity.
economic stability
Avoiding volatility in economic growth rates, inflation, employment, and exchange rates
Exchange rate
The value of one currency in terms of another currency
Expenditure method
Add up all the spending on goods and services in a year
exports
The value of goods and services sold abroad
Full employment ( keynesian)
Full employment is achieved when there is no cyclical unemployment
Full employment ( monetarist )
Full employment is the level of involuntary unemployment that the central bank judges to be acceptable or necessary to keep inflation low
GDP
The value of output produced in a country in a year
Government spending
Current expenditure by the central government and local government on goods and services
