|
Definition
|
Answer
|
|
The monetery value of the total output of an economy over a specific time period.
|
National Income
|
|
A measure of national income that removes the effects of rising prices in order to show changes in the volume of production between time periods.
|
Real National Income
|
|
An economy's total income expressed in money terms, valued in current prices.
|
Nominal National Income
|
|
The amount by which the worth of a good or service increases at each stage of its production.
|
Value Added
|
|
A model that shows how money flows within a simplified economy, with households and firms as key components.
|
Circular Flow of Income
|
|
Additions to the circular flow of income from outside it - these comprise of investment, government expenditure and exports.
|
Injections
|
|
Factors that lead to income not being passed on within the circular flow - these comprise of savings, taxation and imports.
|
Withdrawals
|
|
The total planned demand for an economy's goods and services at a given price level over a specific time period.
|
Aggregate Demand
|
|
Expenditure by central and local governments on goods and services.
|
Government Spending
|
|
The planned spending by firms that adds to an economy's capital stock.
|
Investment
|
|
Spending by foreigners on exported goods and services minus expenditure by households, firms and government on imported products.
|
Net Exports
|
|
Planned spending by households on goods and services.
|
Consumption
|
|
Income that is received but which is not spent.
|
Saving
|
|
The amount of income received by households after taking into account taxes on income and benefits received.
|
Disposable Income
|
|
Latin for 'everything else remaining constant'.
|
Ceretis Puribus
|
|
A long-term loan used to purchased porperty.
|
Mortgages
|
|
The decline in value of an economy's physical assets used in production due to wear and tear or obsolescence.
|
Capital Consumption
|
|
The value of all physical assets used in production in the economy that are still in use, such as machinery, property and vehicles.
|
Capital Stock
|
|
The net rate of return that is expected from an investment.
|
Marginal Efficiency of Capital
|
|
States that the level of planned investment depends on the rate of change of national income.
|
Accelerator Theory of Investment
|
|
The price of one currency expressed in terms of another.
|
Exchange Rate
|
|
Shows the relationship between the total level of demand in an economy and the general level of prices.
|
Aggregate Demand Curve
|
|
A process through which any change in a component of aggregate demand results in a magnified change in real GDP or national income.
|
Multiplier Effect
|
|
Expresses the relationship between the cost of capital and the value of output produced anually by that capital.
|
Capital-Output Ratio
|
|
The proportion of any income that is not passed on within the circular flow.
|
Marginal Prospensity to Withdraw
|
|
The total quantity of output that producers in an economy are willing to supply at specific price levels over a specific time period.
|
Aggregate Supply
|
|
The scarce resources used in production.
|
Factors of Productivity
|
|
Measures the ease with which factors of production move from one use to another.
|
Factor Mobility
|
|
The difference between immigration and emigration.
|
Net Migration
|
|
The percentage of working age people within an economy who are either employed or are actively looking for work.
|
Participation Rate
|
|
A level of economic activity that occurs when aggregate demand and aggregate supply are equal.
|
Macroeconomic Equilibrium
|
|
Unexpected factors that affect aggregate supply negatively or positively, such as a major fall in the price of oil.
|
Supply-side Shocks
|
|
Unexpected factors that affect aggregate demand negatively or positively, such as a significant reduction in income tax rates.
|
Demand-side Shocks
|
