Theme 2 Definitions

Question 1

Actual Growth

Answer 1

Economic growth measured by changes in real GDP

Question 2

Animal Spirits

Answer 2

The level of confidence of Business Owners

Question 3

Balance of payments

Answer 3

A record of all financial dealings over a period of time between
economic agents of one country and another

Question 4

Consumer Price
Index (CPI)

Answer 4

official measure used to calculate inflation, using a weighted basket of goods

Question 5

Cost Push inflation

Answer 5

Inflation caused by a decrease in AS

Question 6

Current Account

Answer 6

A record of the payments for the purchase and sale of goods and
services, as well as income and transfers in and out of a country (X-M)

Question 7

Demand Pull Inflation

Answer 7

inflation caused by an increase in AD

Question 8

Direct Tax

Answer 8

Taxes on spending

Question 9

Disinflation

Answer 9

reduction in the rate of inflation

Question 10

Disposable income

Answer 10

The money consumers have left to spend, after taxes have been taken away and benefits added

Question 11

Economic Growth

Answer 11

An increase in the long term productive potential in the economy; an increase in the amount of goods and services which are produced, measured by an increase in real GDP

Question 12

Expansionary Policy

Answer 12

Fiscal or monetary policy which is aimed at increasing AD

Question 13

Exports

Answer 13

Goods or services sold to foreigners that bring income into the country

Question 14

Export-led Growth

Answer 14

Economic growth arising from an increase in exports

Question 15

Fiscal Policy

Answer 15

The use of Gov spending and taxation to manipulate the level of AD and improve macroeconomic performance

Question 16

Gross Domestic Product (GDP)

Answer 16

The value of goods and services in an economy over a given period of time

Question 17

GDP per capita

Answer 17

Total GDP/Population

Question 18

Gross investment

Answer 18

Investment both to replace old machinery that has depreciated and to create/buy new ones

Question 19

Gross National Income (GNI)

Answer 19

The value of goods and services produced by a country over a period of time (GDP) plus net overseas interest payments and dividends

Question 20

Dividend

Answer 20

A dividend is a distribution of profits by a corporation to its shareholders.

Question 21

Government Spending

Answer 21

Spending by the government for the provision of goods and services

Question 22

Imports

Answer 22

Goods and services bought from foreign countries that takes income out of the country

Question 23

indirect tax

Answer 23

a tax levied on goods and services rather than on income or profits, that bring in Government revenue

Question 24

inflation

Answer 24

general rise in prices of goods and services over a given period of time

Question 25

Injection

Answer 25

Money entering the circular flow of income through investment, gov spending and exports

Question 26

Investment

Answer 26

spending by businesses on capital goods, which lead to the creation of real goods

Question 27

Marginal propensity to consume

Answer 27

The proportion of an increase in income spent on consumption change in consumption/change in income

Question 28

Supply-Side Policies

Answer 28

Are a range of measures aimed at influencing the productive potential of an economy by altering its institutional structure and its working, to promote efficiency and boost output (LRAS). These policies aim to increase the quantity and quality of the factors of production and their productive efficiency, focusing on fostering long-term economic growth.

Question 29

Monetary Policy

Answer 29

the attempts of the central bank regulatory authority to control the level of AD by altering the base interest rates or the amount of money in the economy

Question 30

Unemployment

Answer 30

refers to the state when able, willing, and actively seeking individuals cannot find work within the prevailing economic conditions. It serves as a key indicator of overall economic health.

Question 31

Economic Inactivity

Answer 31

Not searching for work or are not physically able to work

Question 32

Absolute Advantage

Answer 32

that an economy can produce a greater total of goods for the same quantity of inputs.

Question 33

Absolute Poverty

Answer 33

When people are unable to afford sufficient necessities to maintain life; those on less than $1.90 a day

Question 34

Comparative Advantage

Answer 34

occurs when one country can produce a good or service at a lower opportunity cost than another. This means a country can produce a good relatively cheaper than other countries